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Honda Starts Work On $65 Mln Scooter Plant In Vietnam

Honda Vietnam on Saturday officially started work on a US$65 million factory, its second in Vietnam that will mainly manufacture scooters.

The new plant is adjacent to Honda’s existing motorcycle facility near Hanoian suburbs in the northern Vinh Phuc province.
By the second half of next year, the new plant is expected to be operating with an annual production capacity of 500,000 units, according to Koji Onishi, general director of Honda Vietnam Company.

With the new plant, Honda's annual motorcycle production capacity in Vietnam will be expanded to 1.5 million units alongside ongoing demand surges in the country.

State-of-the-art technology will be applied to create the best quality products for Vietnamese customers.

The company reported its 2007 first-half sales at 500,000 units, a year-on-year rise of 27 percent.

Last year it recorded sales of 851,000 units, up 27 percent over the previous year.

Established in 1996, Honda Vietnam has been manufacturing and exporting vehicles and spare parts since 2002.

It has fetched $147 million from shipping Wave Alpha motorbikes, engine sets, IKD (incomplete knock down) sets and components to date.

Supported by the country's strong economy, motorcycle demand in Vietnam is likely to rise 13.6 percent this year to more than 2.5 million units, according to Vietnam's Association of Bicycles and Motorbikes.

Sales were likely to rise on an easing of motorbike registration regulations and on an increase in farm income, motorbikes remain the primary form of transport throughout Vietnam, and there were more than 20 million motorbikes in the country of 84 million.

The association forecast that the number of motorbikes in the country would hit 33 million by 2020 – one motorbike for every three people.

In big cities like Hanoi and Ho Chi Minh City, the ratio is already 1 motorbike for every 2 people.

The expanding market will also be fueled by Italian scooter maker Piaggio, which plans to invest €15 million ($20.4 million) in a 30,000 square meter plant in Vietnam over the 2009-2010 period. The factory would construct Vespas for the local market.

The investment comes as part of Piaggio’s three year Asian expansion plan, said Piaggio CEO Roberto Colaninno in March.

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