BOI Approves KTM’s Entry in Motorcycle Manufacturing, Seen to Provide Local Consumers with More Brand Options

The Philippine Board of Investments (BOI) has approved the application of KTM Asia Motorcycle Manufacturing, Inc. as a new participant under Classification III (Motorcycle) of the new Motor Vehicle Development Program (MVDP).

KTM Asia is a partnership between Ayala Corp. and Austria-based KTM AG which has chosen the Philippines as its Southeast Asian hub. KTM AG is the biggest European motorcycle manufacturer with a 9.6 percent market share across Europe. In 2015, it sold over 180,000 units with revenues exceeding 1 billion euros. It is an Austrian motorcycle manufacturer owned by CROSS Industries AG and India-based Bajaj Auto Limited.

The newly-approved firm is set to invest a total of Php290.6 million in assembly operations (Php114.17 million) and parts manufacturing (Php176.46 million). Commercial operations will begin this month (January 2017) with an initial 19 personnel employed in its assembly plant inside Integrated Micro-Electronics, Inc., another Ayala Corp. subsidiary, located at Building I, North Science Avenue in Binan, Laguna.

The MVDP project is expected to produce four motorcycle models with an initial yearly capacity of 10,000 units and expandable up to 20,000 units annually when fully operational. KTM is projecting at selling around 3,000 to 5,000 units yearly for the domestic market while the rest is for export to China, Thailand, Vietnam and Cambodia.

“With the Philippines positioned as the Southeast Asian hub for KTM, it is poised to boost its export capacity to address the rising demand among motorcycle enthusiasts in the region and nearby countries like China,” said Trade Undersecretary and BOI Managing Head Ceferino Rodolfo.

“KTM is a global brand. Its decision to venture and target the domestic market will further intensify healthy competition with the already established brands from Japan and China, thus providing more brand options for local consumers,” he said.

Undersecretary Rodolfo said that the local motorcycle segment is one of the fastest growing sub-sectors of the automotive industry in the region, beating the downward trend experienced in other countries.“And the good news is, there’s still room for growth in the coming years,” he said.

While the final 2016 motorcycle industry sales are yet to be released, the Motorcycle Development Program Participants Association (MDPPA) remains confident it will surpass a million mark in sales for last year. MDPPA figures showed that from January to June 2016, a total of 544,699 motorcycle units were sold, up 42 percent from the 850,509 total units sold in 2015.

With industry growth surpassing expectations, MDPPA is optimistic that domestic sales could hit up to 2.5 million units by 2020 and the Philippines could even reach or top Thailand as the biggest seller of motorcycles next only to regional powerhouse Indonesia.

The Motorcycle Industry Roadmap envisions an industry with the potential to expand manufacturing and sales operations in the country due to the affinity of the Filipinos with motorcycle usage. From leisure and personal use to business needs, the motorcycle is a viable means of transport in urban and rural areas. In contrast with other Southeast Asian markets, the domestic market is not yet saturated, providing many investment opportunities. The growing Filipino middle class sees motorcycles as efficient and cost-effective for both personal and business needs. With easy access to credit, sales potential in the country continues to be promising.

Consumers are able to buy motorcycles at reasonable prices. At present, Japanese brands such as Honda, Kawasaki, Suzuki and Yamaha continue to dominate the market. Some Chinese brands are also gaining prominence. The entry of a renowned European brand such as KTM is expected to spark further interest among motorcycle enthusiasts. (BOI)