Q&A: Colombia to Reach up to 30% Market Share of South American Motorcycle and Scooter Sector by 2021

Anyone who has spent time in Latin America knows how many people rely on a motorcycle. With household income remaining low for most families and commute times being egregious for many big-city car owners, bikes are the often best solution for getting around.

According to a new forecast by TechSci Research, the popularity of two-wheelers is only set to grow. The company’s “South America Two-Wheeler Market” report has predicted that the combined market for both motorcycle and scooter sales on the continent will eclipse $7 billion USD by 2021.

The growth of the motorcycle market in Colombia was on display earlier this year at the Feria de las Dos Ruedas in Medellín bike show. (Credit: Loren Moss)

The 261-page analysis looks at different locations and segments of the industry in South America. Its conclusion is that the story is largely similar across the board: There is a growing demand for scooters, a lack public transport infrastructure, and a rising young population that will combine to drive demand for two-wheelers.

The Colombian market is one of the brights spots. It is already the second largest in the region behind Brazil, and TechSci Research has projected steady growth for the nation, with the bulk of that coming from the already-established providers.

To shed some more insight on how the bike industry will grow in Colombia, Finance Colombia recently got the chance to speak with Karan Chechi, research director at TechSci Research.

Finance Colombia: Generally, what did the report find about the South American market overall?

Karan Chechi: The growing presence of various multinational companies — such as Honda, Suzuki, Yamaha, Bajaj, BMW, Lifan, and Kawasaki — coupled with increasing penetration of domestic players — such as Dafra, Motomel, Corven, Mavilla, and Zanella — is expected to intensify the South American two-wheeler market in the coming years.

Moreover, the introduction of supplementary features in prominent models is expected to moderately increase the average selling price of two-wheelers in the region. Therefore, escalating average selling price and rising sales of two-wheelers are forecast to boost revenue of South America two-wheeler market during 2016-2021.

Finance Colombia: The Colombian two-wheeler market, comprising both motorcycle and scooter sales, is already one of the largest in Latin America. How high do you see it getting by 2021?

Karan Chechi: The current size of the Colombian two-wheeler market was between 600,000 to 700,000 units in 2015. By 2021, the Colombian two-wheeler market is expected to rise to $1 billion USD to $2 billion USD in value terms, growing at a rate of 5% to 6%. In volume terms, we project it will rise to slightly less than one million units, growing at a rate of close to 3%.

Finance Colombia: How does the Colombian market compare, rankings-wise, to the likes of Brazil, Argentina, Chile, and the other big countries in South America?

Karan Chechi: Volume-wise, the Colombian market was one of the top markets in 2015 after Brazil. It has approximately 21% to 23% of volume market share, while Brazil had the largest volume share in a range of 40% to 45% in 2015.

We project Colombia to remain one of the top markets — even increasing its market share to close to 30% by 2021. Already, the Colombian two-wheeler market is way ahead of other countries including, Argentina, Peru, Ecuador, Chile, and Venezuela.

Finance Colombia: Are we seeing new players entering in Colombia? Or is the larger volume expected to come from established companies?

Karan Chechi: Yes, there are some new players that are entering. However, the projected growth in the industry by 2022 is expected to come from established players: Auteco, Incolmotos Yamaha, AKT Motos, and Suzuki, among others.

Backed by rising disposable incomes and inadequate road infrastructure, the market shares of the established players in Colombia are expected to rise by 2021.

Finance Colombia: So ultimately we should be expecting a lot of excitement here in Colombia in the coming years? A lot of progress?

Karan Chechi: At a brisk pace of 5% to 6% growth in value terms by 2021 — backed by an increase in purchasing power of Colombian citizens, expanding population, and bad roads — the Colombian two-wheeler market is expected to progress. It is poised to maintain its spot as one of the top markets in South America by 2022 and have a market share of 25% to 30%.