A report on the evolution of Chinese motorcycles by David McMullan the International Editor of ChinaMotor Magazine
David McMullan aka the ‘Englishman in China’ has worked with the Chinese motorcycle industry for 9 years as a journalist and consultant. In these years he has seen the highs lows and rebirth of the Chinese industry. He currently resides in the city of Chongqing the unofficial capital of the motorcycling world.
CHINA GATHERS BIG BIKE FORCES
The motorcycle zeitgeist of China is changing because of fast growing interest in big bikes. The potential sale is estimated to be over two million units.
A major catalyst has been the recent success of Ducati on the Chinese mainland. This entry of a leading European brand has opened the eyes of many Chinese motorcycle factory executives.
The Ducati presence in China is encouraging the development of China’s own big displacement motorcycles for domestic use and export. It has also sparked competitive interest from other European manufacturers who now greedily covet China’s huge middle class leisure market.
MV Agusta has quickly followed Ducati's lead. On 3 July 2012 the producers of the ‘Ferrari of motorcycles’ signed an agreement with motorcycle giants Chongqing Lifan Industry Group Ltd (Lifan) confirming that Lifan will become the franchised agent for them in China. This represents MV Agusta’s first collaboration in China and both parties are reported to be ‘delighted’ by their agreement to carry out research and development in complete motorcycle and engine technology as well as parts procurement.
The cooperation represents a huge feather in the cap of Lifan who are the latest company to announce their intentions of producing larger displacement motorcycles for the world market.
At the Beijing National Convention Centre MV Agusta’s chief sales officer Umberto Uccelli said: “The Chinese market has always been a desirable market and we had spent a lot of time looking for a cooperation partner before we met Lifan.”
Uccelli also declared intent to authorise Lifan to exclusively use MV Agusta’s Cagiva brand name.
“Lifan is an outstanding motorcycle maker in the Chinese motorcycle industry, a leader of technical innovation in areas such as large, medium and small displacement, water-cooled, EFI and multiple-valve engines,” added Uccelli. “Lifan motorcycle is seen almost everywhere in the world. It has great market development capability and innovation spirit.”
TWO MILLION POTENTIAL
At the signing ceremony which kicked off MV business operations in China, Lifan president Shang You responded: “MV Agusta is a world renowned motorcycle brand and large displacement luxurious motorcycles like MV Agusta will be greatly accepted by China’s growing army of motorcycle fans.
“We have conducted a survey which shows that there are over two million people who can afford, and are interested in buying large displacement luxury motorcycles in China! This is the goal of our market development.”
Uccelli added that they are now setting the prices for MV Agusta motorcycles based on Chinese market conditions. The MV F4 series is likely to be the first that hits the market. Customers can't wait to get their hands on the 300kph 750 and 1000cc models.
LIFAN BIG BIKE AMBITION
As well as the MV business deal ambitious Lifan wants to produce its own big bike range. President You acknowledges that even though China is the biggest producer and consumer of motorcycles in the world the luxury big bike market continues to be dominated by brands such as Harley-Davidson, Triumph, Ducati and MV. But maybe their dominion days are numbered because Lifan has begun research and development of 600-800cc displacement motorcycles.
“As motorcycles are being used as leisure and recreational vehicles in China, large displacement motorcycles will be the future development trend," added president You.
Lifan has primarily been in involved in the medium and small displacement motorcycle sectors, but in recent years has also moved into the 400cc class in which it holds a safe sales lead in China.
The break into the big bike home market through the link with MV is a significant new chapter in the company's progress, and Lifan is confident that the move will increase the company's industrial status and the Chinese motorcycle industry as a whole.
JIALING ON BIG BIKE BANDWAGON
Lifan is not the only Chinese giant aiming high. Rival Chongqing Jialing also wants to go large.
Jialing Group general manager Duan Xiao reasons that future consumers will be mostly made up of post 1980s and 1990s generations who prefer “cool and stylish” bigger motorcycles to be used as a leisure and recreational product.
At the Jialing 2011 Half Year Marketing Seminar on 7 July it was revealed that this leading Chinese motorcycle producer’s main factory and headquarters would be completely moved from its current location in the Shapingba district of Chongqing to a new location in Bishan, Chongqing by June 2012 to facilitate big bike production.
General manager Xiao said that Jialing would start trial operations from January to March 2012, and it would gradually move current production lines to Bishan from March 2012 onwards.
"Jialing will achieve an overall transformation through its complete relocation," said Xiao. Construction on the 3600 acre site started in January 2010 and first phase annual production is planned at 850,000 motorcycles and 950,000 engines. The new factory will eventually have an overall annual output capacity of 1.5 million motorcycles and 2 million engines. Output value will exceed RMB 10 billion by 2014 when the third phase is completed.
Jialing is taking the big bike market so seriously that general manager Xiao declared that some of the factory's small bike production will be cut in favour of bigger bikes. Already 12 sub-200cc models have been dropped.
MODELS UP TO 1800cc
The Jialing Group has made plans to develop and produce engines up to 1800cc in its bid to exploit the large displacement motorcycle world.
Jialing is being spurred on by a 600cc model it has already produced and found to be an instant hit.
Said Jialing general manager Duan Xiao: “It provides a terrific market prospect. Even after its domestic sales price was increased to RMB 31,800 from RMB 29,800 it was in strong demand. It's even a competitive rival of the BMW 650cc on overseas markets due to its popularity.
"We will successively launch 300 and 800cc sports bikes on the market this and next year," he promised, adding that Jialing also intends to enter the snowmobile and ATV markets.
Sales revenue from large displacement machinery is projected to account for half of Jialing total sales revenue within the next three years. This represents a huge change in China’s motorcycle manufacture culture.
In Chongqing, the motorcycle capital of China, other motorcycle manufacturers also stepping up to the bigger displacement plate include Loncin, Zongshen and Huansong. In fact most of Chongqing's top motorcycle companies are upgrading and transforming, and are now tending to look with some disdain at low displacement, low technical content, homogenised product, and its attendant price competition in the Chinese motorcycle export industry.
China's big bike army is gathering its forces.