THE Board of Investments (BOI) has approved the application of KTM Asia Motorcycle Manufacturing Inc. to join the Philippines’ new Motor Vehicle Development Program (MVDP) under Classification III (Motorcycle).
KTM Asia is a partnership between Ayala Corp. and Austria-based KTM AG, which has chosen the Philippines as its Southeast Asian hub.
“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,” Trade Undersecretary and BOI managing head Ceferino Rodolfo said on Tuesday.
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 Ltd.
The newly approved firm is set to invest a total of P290.6 million in assembly operations (P114.17 million) and parts manufacturing (P176.46 million). Commercial operations will begin this month, 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 will be for export to China, Thailand, Vietnam and Cambodia.
MDPPA bullish on domestic sales outlook
While the final 2016 motorcycle industry sales figures are yet to be released, the Motorcycle Development Program Participants Association (MDPPA) remains confident it will surpass the one million mark in sales for last year. MDPPA figures show that from January to June 2016, a total of 544,699 motorcycle units were sold, up 42 percent from the same period 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.
At present, Japanese brands such as Honda, Kawasaki, Suzuki and Yamaha continue to dominate the market. Some Chinese brands are also gaining prominence.
Rodolfo said that the entry of a renowned European brand such as KTM is expected to spark further interest among motorcycle enthusiasts.