Scooters/cubs and high end bikes lead the charge into industry repair.
The Chinese motorcycle export philosophy is primarily influenced by the domestic industry.
As times and trends change, domestic consumer groups' demands for motorcycles also change. The changing demands necessitate the evolution and development of the entire industry. In the 1980s, owning a motorcycle in China was a status symbol. In the 1990s, economic practicality, and fuel-efficiency became keywords. At the present time, characteristics such as sports, leisure, and youthfulness are sweeping the entire Chinese motorcycle industry. However, how will domestic motorcycle products develop in 2013 and affect the export market?
Market demands always determine product development trends. According to an in-depth analysis (by CAAM) on 2012 motorcycle production and sales data we find out an interesting phenomenon; although the production and sales of the industry as a whole declined by about 10%, the sales of scooters, cubs and crossovers increased steadily. It is these consumer demands that are shaping the future industry product structure.
In recent years, many domestic motorcycle enterprises have sensed end-market demands for product change; the more astute companies then followed the market demands to develop new products. For instance, the Wuyang-Honda Breeze 110 is a scooter equipped with 110 cc displacement engine and enlarged wheels, endowing a scooter with SUV soul. This product is favoured by domestic consumers and is successfully exported to Japan where it has achieved a good sales record. After analysing the spending habits of young consumer groups, Haojue has launched a scooter model (HJ125T-18) tailored for new generation consumers. This model was well received at CIMAmotor 2012 by foreign buyers causing Haojue to look in to developing an export model. Other new scooter models, such as the Jianshe JS100T-2, Peugeot VIVACITY 125, Dayang DY100T-6, are expected to make huge waves in the market both domestic and export. Besides scooters, there are many notable new cub products. For example, the QS110-2 launched by Jinan Suzuki in late 2012 and the best-selling QS110 form a strong Suzuki cub lineup. Zongshen mainly promotes its unconventional refitted cub ZS11O-53, which has impressed the young consumer groups. Other new cub products, such as Wuyang-Honda WH125-13, Sundiro-HondaWave110, and Dayang DY110-28, will exert a growing influence on the markets.
When scooters and cubs develop rapidly for similar markets the two distinct product types start merging with each other. Chinese motorcycle enterprises are trying to bring differentiation in to their product fields to break with traditional models. New motorcycle types which integrate the advantages of both scooters and cubs have begun to emerge on the market. These types are called scooter cub vehicle (SCV) or cub scooter vehicle (CSV). There are now examples of these products on the domestic market, examples which should have an affect on the future of the export industry. For example, Jialing has incorporated the stylishness of a scooter and practicality of a cub into its new concept product SCV the JL125-9. Wuyang-Honda has rolled out its WH110T-5, an EFI crossover representing the highest level of domestic motorcycle manufacturing. Yingang has launched a CSV called YG110-8A, which features Chinese styling.
The rapid emergence of scooters, cubs, and crossovers is an inevitable product of market changes. The popularity of mopeds, electric bicycles and other similar low end products has caused a number of potential consumers to develop the habit of riding two-wheelers. However, when government regulations and policies become more comprehensive and supervision becomes more effective, the usage of these lower end products will diminish. Consumers are expected to begin seeking alternatives with better riding experience, comfort and performance; making scooters and cubs the first choice for ‘new riders.’
As another important emerging branch, the domestic ‘high-end’ motorcycle field has also become a battlefield for motorcycle enterprises. Since Haojue Suzuki launched the GW250 at CIMAmotor 2012, almost all enterprises have intensified their R&D efforts in the high-end product field, thus giving rise to much needed development competition in the motorcycle industry.
In 2012, high-end products appeared on the Chinese motorcycle market: the Benelli BJ600GS launched by Qjiang almost swept the domestic market. The CFMOTO 650NK attracted a lot of attention. Loncin developed the LX650 by incorporating BMW technologies. Haojue Suzuki also seized the opportunity to launch the GW250S (touring edition of GW250), adding another newcomer to the domestic high-end product family.
Due to these impressive debuts the competition of high-end products is predicted to intensify and become the main theme of the Chinese motorcycle industry in the future.
Raymond Zhang export director of Yingang comments “In the past, the Chinese motorcycle industry had large body mass, but lacked core competitiveness. Therefore, it was far away from world class. However, with the acceleration of high-end product competition, the industry competitiveness will be tremendously boosted as a whole. 2013 is a crucial year for technological innovation. Enterprises should look at proper long-term planning and be cautious at the beginning.
2013 is also a year of adjustment. In this relatively stable year, enterprises should actively reflect on themselves and consider carefully before making decisions. The market is changing, and demands for products are also changing. New products should be constantly developed. In recent years, traditional standard motorcycles became less popular while other product types suddenly emerged. However, market demands may change 5 or 10 years later. Therefore, enterprises must reflect from time to time so as to figure out a most suitable development way, ensuring the R&D direction is aligned with market demands.”
Breaking Shackles by Effective Marketing
Consumer awareness changes with times and enterprise marketing awareness must run to keep up. Although production and sales rank No. 1 in the world, Chinese motorcycle enterprises' knowledge of the market and operation mode is still bound by traditional thinking, which severely restricts the development and growth of the Chinese motorcycle industry. As an example of this narrow minded thinking it is estimated that more than 90% (ChinaMotor Magazine survey) of the enterprises and businesses believe that the only way to make profits is to sell more motorcycles.
Industry expert Winston Guo comments “This view was vindicated in the past when market needs were huge and product supplies inadequate. However, after the market changed and consumer groups become more mature, we realised that past experience cannot reflect the current motorcycle market. In recent years, the total market needs gradually shrunk and the status between businesses and consumers changed. Relying solely on selling more motorcycles to make sustainable profits has become more and more difficult. We have to ask the question, what should we do in 2013?
Can we make profits and sell more motorcycles? The following example may give us different answers. Motorcycle sales in Guizhou province declined seriously last year, causing great pressure to many businesses. After all, sales are essential. If products cannot be sold, they have to suffer a loss. However, in the same region where sales declined, some dealers are still making profits. Although the income is less than the year before, they ran business successfully. How did they achieve this?
In fact, these dealers all have done very well in service marketing. Based on manufacturer guidelines and self-reflection, they put after-sales service on the position equivalent to motorcycle sales. In one dealership, services bring in a profit of over 200 thousand RMB, almost equal to operating costs of the shop. Then, profits of sales are almost pure profits.
The service marketing field is quite profitable, which is especially significant for the off-season in 2013. How to maintain normal earnings in the off-season is a headache for dealers in the off-season. Opening up the service marketing field is undoubtedly a wise choice. Generally, off-season sales are affected because the market is saturated or lacks of purchasing power, but this will not be such a problem for service marketing. What's more, a more saturated market is more conducive to service marketing. It can be predicted that a large number of potential consumers can be accumulated through service marketing. That is, a store can increase visibility and make profits at the same time. Isn't it a good choice to shift the business focus from sales to service?
In addition to service marketing, other new elements, such as brand culture, spin-off products, refitting and customisation, and the Internet, can all be combined with marketing, thus inducing a completely new profit model. The motorcycle industry is an industry value chain rather than just an industry. On this value chain, there are profit growing points anywhere.”
All agree that in China 2013 is the time for the motorcycle industry to break from its traditional shackles and adjust marketing models. Against the backdrop of a new era, new media and new consumer groups, marketing models continue to be updated in order to fit new market environments and consumer groups. New marketing ideas in line with industry development constantly spring up, such as culture-centric marketing, service marketing, internet marketing, sports marketing, motorcycle tour marketing, and motorcycle club marketing. In 2013- the crucial adjustment period of Chinese motorcycle industry- new marketing ideas will play a crucial role.