Financial Barriers To Big Bikes

[CMX]

While I'm aware that Thailand prefers to tax imports to death (protectionism, in order to encourage domestic industrial development), Asean and inter-nation agreements must be in play as well.

As I understand it, Asean nations can now exchange 250 cc bikes without charging each other import taxes. But Japan, China, India, and Taiwan, for example, are not Asean countries, so their bikes are import-taxed at rates determined by individual treaties. I wonder what these must be, but note that if the Lifan twin Cruiser sells for 78K, that import tax cannot be great.

Moreover, there appear to be additional tax burdens on bikes over 250 cc, whatever their source? That is, is it the case that the domestically produced Kawa's are taxed at a higher rate than their 250 - or not? And what is it, that tax, on bikes from Asean nations vs. others - or all they all the same regarding bigger bikes?

Then there is the issue, raised recently elsewhere on this forum, of manufacturers' profiteering. It is irrefutable, I think, to doubt that the vast majority of Thai domestic market of buyers use bikes for transportation, not fun. Leaders must think in this way as well, not to mention about the disadvantage of imported fuel costs to Thailand's balance of trade.

That is, those of us wishing bikes of greater power than those provided in the 250 cc category are only a niche market, pretty much filled by Kawa's offerings. Why would any factory want to enter a tiny market if they must price their vehicles high?

In sum: I don't know much about these tax issues and wonder if someone has FACTS???? about these tax issues?

[Timthai]

You're overcomplicating things... Every company wants to maximise profits, every govt wants to maximise taxes, competition and supply/demand and votes (at polls and with feet) modulate both.

A 110cc commuter is cheap, big bikes are expensive. Buy what you can afford.

Simple econimics.

Cheers.

[katabeachbum]

just read theTH market for +250cc bikes is 1.000 units/year, of which kwaker has +90%

yammy is into it to raise the image of their less than 250cc bikes, and expect their big bike division to lose money or break even, despite high markups. they keep a very tight locistic, with almost no spareparts in TH

as far as I know, all imported bikes above 250cc are subject to 80% duty and 30% excice (on bikes value and duty), reduced to 25% excice if E20 compatible. bikes import value multiplied with 2,8 gives you the wholesale value

[BigBikeBKK]

Why would any factory want to enter a tiny market if they must price their vehicles high?

Simple, because they can.

Do you think that Ducati, KTM, HD, BMW etc are unprofitable in Thailand? Quite the opposite.

Basic economics teaches us that there are a couple of ways to for a company to measure and achieve maximum profit.

The total revenue–total cost method relies on the fact that profit equals revenue minus cost. The marginal revenue / marginal cost method is based on the fact that total profit in a perfectly competitive market reaches its maximum point where marginal revenue equals marginal cost.

Premium brands don't rely on low margin high volume sales to maximize their profit. For motorcycles in Thailand the premium brands, as reflected by pricing premiums relative to other markets would have to be KTM, HD, BMW, Ducati, Triumph, Yamaha Big Bike and Suzuki Big Bike. While actual costs, revenue and margins are not known, one can be reasonably sure that Ducati doesn't have to sell nearly as many units of their Multistrada to equal the profit of Honda selling the CB'r' 250.

Or think of it like this- here in Thailand, for the price of one imported BMW F800GS you can buy yourself 3 domestically manufactured Kawasaki Versys and still have change left over. Yet in other markets these bikes are nearly identical in retail price. It's a safe bet to say that it does not cost BMW 3 times the value of a Versys to import and sell an F800GS in Thailand. Once you factor in the variable and fixed costs you can make a reasonable guesstimate on the profit margin. Would it be safe to say that BMW makes more net profit on the sale of 1 F800GS than Kawasaki does on the sale of 3 Versys?

Bloody hell, econ 101 was ages ago and my prof would probably have a fit if he read the drivel I just wrote, but then again, if he saw the post to which I have responded I might be afforded some latitude

[BigBikeBKK]

just read theTH market for +250cc bikes is 1.000 units/year, of which kwaker has +90%

yammy is into it to raise the image of their less than 250cc bikes, and expect their big bike division to lose money or break even, despite high markups. they keep a very tight locistic, with almost no spareparts in TH

as far as I know, all imported bikes above 250cc are subject to 80% duty and 30% excice (on bikes value and duty), reduced to 25% excice if E20 compatible. bikes import value multiplied with 2,8 gives you the wholesale value

Hmmm... Source?

So after Kawasaki's ~900 units the other big bike dealers would be selling only 100 units a year between them? Sorry, I don't buy that.

Ducati alone is selling between 12-15 units / month just at their Bangkok branch. Triumph, BMW, KTM, Yamaha Big Bike, HD and Suzuki Big Bike all seem to be selling a lot of new bikes these days. Do you think Yamaha could support its nation-wide dealer network on less than 100 sales / year? Non factory and "grey market" importers such as Red Baron, 59 Bike etc import and sell a lot of new bikes too.

Prestige brands like Ducati continues to sell tons of bikes thanks to their brand cachet and their very affordable leasing program. Expensive bikes have become a status symbol for many wealthy Thais and clever leasing programs put expensive bikes within the reach of many middle class consumers too.

[CMX]

Kata,

Thanks for FACTS!! Clearly the Thai government is either discouraging the purchase of big bikes, encouraging the addition of bike construction facilities within Thailand, or both.

Had not thought that the taxes were that great!

As things are now, it's hard not to think that the Chinese will introduce entry level 300-600 bikes at lower prices, their costs being lower in the first place, while the big producers sit on the situation as it is. Even if the Honda 600 rumors develop into truth some day.

[Richard-BKK]

Kawasaki Thailand did not meet its target for 2010 and currently it seem not to get close to the set expected sales for 2011. Which is probably the reason why Kawasaki reintroduced the step-trough motorcycle for Thailand. Not forget that selling big bikes look cool but bring often little profit to a company... Honda is a master in making profit, they sell small bikes like candy and just start to have ideas about selling bigger bikes....

Indian Bajaj Auto, more than once ask Kawasaki to buy the remaining 53 percent of the motorcycle business, and probably some day Kawasaki well sell the motorcycle business to the worldwide second biggest motorcycle company... All Southeast Asian (ASEAN) Kawasaki companies are a joint venture between Bajaj Auto (India, Thailand) and Kawasaki Heavy (Japan).

For the Chinese.... Thailand also has a free trade agreement with China which includes motorcycle with less than 250cc engine size. Thailand keeps China from flooding Thailand with cheap bike by its extremely high exhaust emission standard.

Lifan Motorcycles available in Thailand are 100% made in Thailand, they probably the biggest motorcycle manufacturing company in Thailand. Okay they also make car engines, but the produce the models available in Thailand for export on a global scale.....