Why Motorcycles Industry Facing Serious Times

In the past few years, most of the industries including motorcycle industry are facing severe economic crisis. There are numerous factors that have equally contributed towards the growing crisis of the industries. The shortage of electricity, high wages of labors, shortage of gas, high taxes on industries, the terrorism factor and increased prices of raw material. One problem is to find good raw material for an affordable price. The profits of most industries including the motorcycle industry have been gone down by half and in most cases even lower. This is the main reason that most of the industries are shifting their businesses to other countries like China and Bangladesh where wages are comparatively lower and they are not bound to pay heavy taxes even if they are not earning handsomely.

The motorcycle industry is consistently being ignored by the government authorities and in the past few years motorcycle industry has been on the top of the list of collapsing industries. Motorcycles are the most cost effective modes of transport that are most convenient for the middle class residing in our society. Most of the families have their monthly income attached with the motorcycle industry. From the years 2007 till 2011 the Honda motorcycle’s price has gone up from Rs 58000 to Rs 68500. The increase in the price of polycarbonate used in manufacturing, price of alloy, cost of metal and the increase in the price of various materials used in motorcycle manufacturing have lead to such an abrupt increase in the motorcycle prices, making them beyond affordable to the already poverty-stricken and inflation ridden Pakistani middle class.

Some other facts regarding the crisis in motorcycle industry, which have given a strong blow to the whole business. Back in 2007 the labor rate in the country was Rs 5000 per month however in 2011 the labor rate was fixed at Rs 8000. The rubber per bundle used in the motorcycle manufacturing was Rs 1250 in 2007 whereas in 2011 it was Rs 2500 per bundle. The glass used in covering the head and tail lights along with the indicators costs 450 Rs per bike. The genuine company logo set consisting of three insignia’s on the sides of the bike used to cost Rs 400 in 2007 whereas in 2011 it costs Rs 1200. The pair of rear view mirrors used to costs Rs 750 back in 2007 but in 2011 its price dramatically rose up to 1500. Exactly 2 times! The taxes on parts import have also drastically increased.

Due to such expensive manufacturing the prices of the motorcycles have also gone up. Due to the increase in prices of the motorcycles less people are able to buy motorcycle for their personal use. People not being able to buy motorcycle prefer travelling of local wagons and local buses. Not only this, companies desiring to make their profit more and more, are reducing the weight quality of their bikes.

The final blow to the industry came from mushroom growth of motorcycle manufacturers, who in order to gain competitive advantage decreased the profits, taking the whole industry down. With increasing costs and decreasing profits, the only way out is that to give quality and maintain relative prices across the country. This way, both the makers, dealers, retailers and the buyers will all be at a same platform.