BoI green-lights Ayala’s motorcycle manufacturing unit

THE BOARD of Investments (BoI) approved the application of KTM Asia Motorcycle Manufacturing, Inc. as a new participant under the government’s Motor Vehicle Development Program (MVDP), noting that the joint venture of Ayala Corp. and Austria’s KTM AG, is set to invest P290 million in the country.

In a statement, BoI said KTM Asia has chosen the Philippines as its Southeast Asian hub. The total investment accounts for assembly operations and parts manufacturing, valued at P114.17 million and P176.46 million respectively.

Operations of KTM Asia is slated to start this month at its assembly plant inside Integrated Micro- Electronics, Inc.’s ( IMI) facility in Laguna. IMI is also an Ayala subsidiary.

“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,” said Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo in a statement.

“KTM is a global brand. Its decision to venture and target the domestic market will further intensify healthy competition with the already established brands from Japan and China, thus providing more brand options for local consumers,” he said, referring to KTM AG, which is the biggest European motorcycle manufacturer with a 9.6% market share across Europe.

In 2015, KTM sold over 180,000 units with revenues exceeding € 1 billion. The Austrian motorcycle manufacturer is owned by CROSS Industries AG and India- based Bajaj Auto Limited.

BoI said KTM Asia would have an initial yearly capacity of 10,000 units — composed of four motorcycle models — before expanding to 20,000 units annually once full operations kick in.

The project is meant predominantly for export, with KTM expecting to sell between 3,000 and 5,000 units yearly in the domestic market, while shipping the rest to China, Thailand, Vietnam and Cambodia.

While full-year data is yet to be released, the Motorcycle Development Program Participants Association ( MDPPA) remains confident it would sell over a million units in 2016.

In an statement posted on its Web site in August last year, MDPPA said that sales in the first semester jumped 42% to 544,699 motorcycle units. In the first 6 months of the year, the motorcycle industry already neared its 2015 year- end total sales of 850,509 units.

“Based on previous years’ trends, July to December usually bring in better commerce, making the association bullish about reaching the 1 million mark at the end of the year,” the statement read.

MDPPA is optimistic that domestic sales could hit up to 2.5 million units by 2020, making the Philippines the second largest Southeast Asian country in terms of motorcycle sales, racing past Thailand, while Indonesia keeps its lead. —