According to the “Report of Production and Sales Requirements and Investment Analysis on China’s Motorcycle Manufacturing Industry from 2011 to 2015,” organized by the China Chamber of Commerce, China’s motorcycle consumption can be best illustrated using a three-level pyramid structure.
The lowest level consists of motorcycles with prices lower than 5,000 RMB Yuan. These motorcycles are mostly sold in rural areas (especially since the wide-spread banning of motorcycles in urban areas) and account for 60 percent of the total sales volume.
The middle level in comprised of motorcycles with prices between 5,000 Yuan and 13,000 Yuan. These motorcycles are mostly sold in towns and their surrounding counties and account for 30 percent of the total sales volume.
The top level consists of motorcycles with prices higher than 13,000 Yuan. These motorcycles are mostly sold in prosperous coastal cities (Shanghai, Beijing and Guangzhou) and surrounding areas and account for 10 percent of the total sales volume.
This indicates that requirements for motorcycles have changed under a new market environment. Residents in tier-1 and tier-2 cities purchase motorcycles because motorcycles represent a type of culture.
The residents there increasingly use motorcycles for leisure and sports purposes. Conversely, residents in rural areas and counties use motorcycles mostly as a means of transportation and agricultural logistics. This phenomenon has been shown by research.
In more affluent cities such as Nanjing, Lianyungang, and Xuzhou, the demand on large-displacement motorcycles has been increasing rapidly through the years.
In these urban centers motorcycle club activities are actively organized (although they tend to avoid riding in the cities they live in due to the bans).
In tier-3 and tier-4 cities such as Yancheng and Donghai, and especially on city outskirts, motorcycles priced at around 6,000 Yuan are the best-selling items as most people use them as a means of transportation.
In these areas, people rarely purchase motorcycles priced above 10,000 Yuan, (Chinese examples of these bikes would be the CFMOTO 650 and Benelli BN600). Meanwhile, 50 cc to 125 cc small-displacement scooters, which are light, comfortable, and increasingly fashionable, are gradually replacing cubs.
Scooters are gaining increasing popularity in cities where motorcycles are not banned; a good non-Chinese example of this would be the Freedom Today model released recently by Honda. This model has won favorable market responses. In addition, more and more people want to refit their small engine motorcycles into larger-displacement machines.
Many people are willing to pay 6,000 to 7,000 Yuan to refit their motorcycles (bought at around 5,000 Yuan). However, the supply chain of components for motorcycle modification is inadequate. If this problem is resolved, motorcycle modification will be a new growth force on the domestic Chinese motorcycle market.
The motorcycle industry development trend indicates that transition to large-displacement motorcycles is an essential and progressive move. While the sales volume of motorcycles for transportation purposes decreases, the sales volume of large-displacement motorcycles increases steadily (in China, large-displacement motorcycles are motorcycles with 150 cc or larger displacement engines.
According to international specifications, large-displacement motorcycles are motorcycles that have 600 cc or larger displacement). In 2008, the sales volume of large-displacement motorcycles accounted for only 2.3% of the total motorcycle sales volume.
In 2009 and 2010, the percentage increased to 3.4% and 5.3%, respectively. International large-displacement motorcycle manufacturers, including Harley Davidson, BMW, Ducati, MV Agusta and the Japanese manufacturers, are coming to China for their slice of a very lucrative pie.
Chinese motorcycle manufacturers have long focused on markets in rural areas. These products are cost-effective but failure to pay enough attention to product style and branding has led to insufficient innovation and R&D research and as a result they have found themselves in a negative position facing the new consumption trend.
However, the launch of the CFMOTO 650, and Benelli BN600, has shown that the quality of Chinese large-displacement motorcycles is improving and that manufacture ring processes have started evolving
Requirement for marketing approach changes
In addition to shifting from transportation-oriented motorcycles to larger-displacement leisure motorcycles, Chinese motorcycle manufacturers have been advised to change their marketing approaches to meet new market requirements. Consumers of large-displacement motorcycles are completely different from consumers of small-displacement motorcycles in terms of education background, life style, consumption levels, consumption habits, and consumption psychology and this phenomenon has to be taken in to consideration; however, research has revealed that manufacturers often adopted the same showroom sales marketing approach for the two different types of product.
On overseas markets, manufacturers pay far more attention to eye-catching displays and product experience for large-displacement motorcycle models. Instead of launching advertisements that have a poor and instantly forgettable message, manufacturers combine brand value with services and influential public events such as club activities and motorcycle race sponsorship to generate culture recognition.
Inadequate service is another key factor leading to the low purchase rate of Chinese large-displacement motorcycles at showrooms. Selling products which target smaller and more particular consumer groups requires offering more complete services than Chinese dealers are used to providing, including (among others), driving licenses, maintenance, refitting, safe-riding tutoring, and so on. Research has shown that some motorcycle dealers have abandoned traditional sales approaches shifted to online sales platforms and adopted new product sales ideas.
A good example of this is the Caoji motorcycle dealer which concentrates on attracting fans from the Xi Ci Hu Tong chat forum and WeChat friend circles; internet forums that are used by millions of Chinese.
The Xuzhou Xiangqi motorcycle dealer has moved one step further in its marketing plans and now includes motorcycle tourism team travel, motorcycle leasing, racing services, and motorcycle tourism accommodation. Recently, they announced the organization of a tour event during which participants will ride private motorcycles in six southeastern Asian countries.
The motorcycle dealer’s tour club service will provide participants with a tour guide and BMW G650GS motorcycles imported from Germany. They will begin their journey from Xishuangbanna (Yunnan province, China) and visit Vietnam, Cambodia, Thailand, Malaysia, Myanmar, and Laos. The cost to the participant covers visa application, accommodations, and fuel.
Despite the measures taken integrating Chinese riders into the full “big bike” culture would seem an uphill struggle considering the ban on motorcycles in most urban centers and on Chinese motorways, but as always in China “where there’s a will, there’s a way.”