Motorbike sales hit by downturn

http://www.phnompenhpost.com/

Written by Sam Rith
Thursday, 18 June 2009

Retailers say they are selling fewer bikes, with many adding that they are reducing inventories in
response to falling demand, a trend that has had a negative knock-on effect with wholesalers

RETAILERS and wholesalers say sales of motorbikes have dropped in recent months, pinning the blame on the global economic downturn that has hit the Kingdom's economy.

Though motorbikes are the primary form of transport for many Cambodians, sellers say that with a drop in incomes, customers are no longer as willing to purchase new bikes or upgrade to the latest models.

"Before May, I could sell two to four motorcycles per day, but since then I sometimes go two or three days without selling anything," said Taing Kok Hai, owner of Taing Kok Hai Motorcycle Shop on Phnom Penh's Sihanouk Boulevard.

"My business now is facing bankruptcy since no customers are buying or updating their motorcycles."

Sok Phalra, owner of the nearby Japan Motorcycles Shop, said that his motorcycle sales had also fallen, despite his attempt to attract customers by dropping prices.

--------------------------------------------------------------------------------
My business now is facing bankruptcy ... no customers are buying or updating their motorcycles.
--------------------------------------------------------------------------------

"Even though I have dropped the price by about 30 percent, there are still not many customers," he said. "Some days I get a few customers, and some days I receive no customers."

The problem is not merely confined to the capital, said motorbike sellers.

Sok Chhou, owner of Ly Mong Kouk Motorcycle Shop in Preah Sihanouk province, said that before April this year, her shop has sold 70 to 80 motorcycles per month, compared with 200 to 300 motorcycles per month in the first half of 2008.

"Now I can only sell two motorcycles per week, while previously I could sell plenty," she said, adding that the downturn in sales had hit after the economic crisis began to affect Cambodia at the end of last year, and had since worsened.

The downturn in retail sales caused by a drop in demand has been felt down the supply chain to motorbike wholesalers.

Retailers said they have began to reduce stocks.

Taing Kok Hai said that the slump had prompted him to reduce his inventory since the beginning of May from 20 to 10 motorcycles to avoid tying up capital in goods that were not selling.

Wholesalers told the Post this week that they were feeling the drop in retailer demand.

Chea Sophearo, sales manager for Yamaha Motor Cambodia Co Ltd, said distribution to retailers had dropped seriously from late April this year.

He said the company's usual distribution of around 300 to 600 motorcycles per month had decreased to between 200 and 300 per month.

Property market hits sales
He added that, previously, many customers had earned money from land sales, which led to increases in motorbike sales, but that the economic situation had ended the flow of cash as the bottom has fallen out of the property market, one of the worst-hit sectors in the Cambodian economy.

Realtors, including Bonna Realty, have predicted that activity in the housing market would pick up by the end of the year.

The lack of available capital has also affected investment in fixed assets in the motorcycle industry, said Chea Sopearo.

Due to the downturn in demand, he has postponed plans to build a factory that would assemble motorbikes in the Kingdom, he said.

Chea Sophearo said Yamaha was holding its wholesale prices steady - in the US$1,460 to $1,750 range - but was attempting to lure customers with promotions such as free telephones, televisions and other consumer durables.

Mao Thora, secretary of state at the Ministry of Commerce, said Cambodia welcomed companies to import motorcycles if they are able to sell units.

"We do not ban anyone. [Companies] can import whatever kind of motorcycles they wish," he said.