Thanks to the improvement of the consumption level of residents in China, the main use of motorcycles is gradually changing from means of transportation/means of production to leisure and entertainment functions. Product upgrading is advancing rapidly. Independent and joint-venture brand boutique models are emerging constantly.

1, the overall contraction in production and sales, exports accounted for 60%, small imports, but the growth rate is expanding!

After peaking in 2008, motorcycle production/sales in China generally shrank. In 2018, 15.57 million motorcycles were sold, down 43% from 2008. Due to the impact of emission switching country iv and other factors, motorcycle sales in 2019 increased by 10% to 17.13 million units, but the increase was mainly driven by electric motorcycles.

Since 2009, the proportion of China's motorcycle exports has been increasing year by year, reaching 9.28 million in 2018, accounting for 60%.

China's motorcycle import scale is relatively small, 34,100 in 2018, most of which are large-displacement models above 250cc, of which 17,700 are large-displacement models above 500CC, accounting for 52%.

2. The rapid growth of production and sales of automobiles and electric bicycles squeezes motorcycle consumption

Since 2000, the scale of production and sales of automobiles and electric bicycles has grown rapidly and become an important means of transportation, while motorcycle consumption has been squeezed. In the automobile industry, the sales volume reached 25.769 million in 2019, among which the sales volume of passenger cars reached 21.444 million, an increase of 175% compared with 2008.

The electric vehicle industry's annual output of 27,077 million vehicles in 2019 is 1.6 times that of motorcycles during the same period, an increase of 23.7 percent over 2008.

3. The demand for large displacement is growing rapidly, but the base is still very low, and small displacement is still the mainstream

The trend of the evolution of China's motorcycle sales structure from divided displacement to large displacement is determined. The sales proportion of models above 150cc is increasing year by year, and 100-150cc is still the most mainstream displacement segment at present. Take two-wheeled vehicles as an example, the sales volume in 2019 is 10.548 million, accounting for 78.8%. The sales volume below 250CC is 13.034 million units, accounting for 98.7%, indicating that the motorcycle is still dominated by tool properties.

Rapid release of demand for large emissions

Sales of large displacement motorcycles above 250cc increased rapidly; In 2019, 126,000 two-wheeled motorcycles were sold in the range of 2.5 ~400cc, and 51,000 were sold in the range of 400CC or above, totaling 177,000, with a year-on-year growth of 67.3%.

Big displacement pattern: Qianjiang and Spring Breeze lead the domestic big exhaust enterprises, while Longxin, Zongshen and Lifan move forward steadily, because the three Chongqing enterprises are the main suppliers of big exhaust engines and have their own supporting advantages. Currently, Longxin slightly wins as the wuji brand. Domestic leading brands Dachangjiang, Wuyang Honda, and New Continent Honda are all involved in less than 300CC displacement, and will reportedly be involved in the middle row in the next two years.

Among these motorcycle companies, Qianjiang Motorcycle grew 10.7 percent in 2019. At present, domestic motorcycles above 250cc account for a relatively high proportion of exports, but the proportion of domestic sales is rapidly increasing. Take Qianjiang as an example, the export share in 2017/18/19 reached 62%/65%/41% respectively. We estimate that the market demand of large emission motorcycles in China will be about 200,000 in 2020.

4. Large-displacement motorcycles represent a new direction of consumption upgrade

Large displacement motorcycle in line with the direction of consumption upgrade, while the policy environment is good for motorcycle consumption. Small motorcycle body, can effectively alleviate congestion; Large displacement motorcycle relatively low price and power, excellent handling performance, is a good leisure, entertainment tools, in line with the trend of consumption upgrade.

Policy:

1. The policy of banning and restricting motorcycle riding in the whole country tends to be relaxed. For example, Guangdong province requires all cities to pilot "license sales" and gradually expand the scope;

2. The management of electric bicycles tends to be standardized. The maximum design speed exceeding 25km/h or the whole vehicle weight exceeding 55kg will be listed as motor vehicles, and consumption is expected to flow back to motorcycles.

3. The market potential of large displacement motorcycle is huge. We estimate that the sales volume of large displacement motorcycles above 250cc in China will be about 150,000 in 2020, corresponding to 1 motorcycle per 10,000 people, and the per capita consumption is only about 1/10 of that of developed countries. Assuming that the sales volume will reach 8 motorcycles per 10,000 people in 2030, corresponding to an annual sales volume of 1.12 million, corresponding to a CAGR of 21.6%, the market potential is huge.

The competition pattern tends to be scattered in the short term, but the market will eventually focus on independent head, joint venture vehicle enterprises. In the process of rapid expansion of the market, second-tier car companies are expected to share the market dividends in stages by virtue of high cost performance. In the past 10 years, domestically produced large-displacement motorcycles have grown from nothing, with product pedigree and displacement segment continuously improved and maturity rapidly improved. Referring to the history of domestic automobile development and the competition pattern of overseas motorcycle market, if the joint venture brands wantonly enter the Chinese market, then the joint venture brands and the major domestic brands will become the biggest beneficiaries of the rising demand for large emission motorcycles.