Clogged Streets Fueling Motorcycle Boom in Brazil
Olivenaldo Bonfim weaves through the crazy quilt of Rio de Janeiro’s roadways each working day to deliver documents on his Honda motorcycle. His pay: 200 reais ($177) a month.
“It’s too much adrenaline sometimes,” said Bonfim, 22, whose previous job was delivering pharmacy prescriptions by bicycle. “But if it weren’t for my motorcycle, I’d be unemployed.”
Bonfim is part of Brazil’s motorcycle boom. Companies such as Honda Motor Co. and Yamaha Motor Co. are benefiting from a market that soared 48% last year, compared with Brazil’s economic growth of 3%. That’s good news for the Japanese firms, respectively the world’s first- and second-largest motorcycle makers, as demand in much of Asia slumps.
Brazil’s surge in motorbike sales is fueled by consumers seeking a cheap, efficient way to commute as big cities become more clogged with car traffic. In Rio de Janeiro, a city of winding thoroughfares and narrow colonial carriageways, deft motorcyclists leave other drivers in the dust.
Potential is on the minds of the companies making motorcycles in Brazil, Latin America’s largest country, with 160 million people. Honda estimates there is only 1 motorbike for every 81 Brazilians.
That’s in contrast with emerging markets in Southeast Asia like Thailand, where motorcycles are for many low-income people the most common step up from bicycles, and are even used as taxis. One of every eight people have motorcycles in Thailand. In Vietnam, there is one for every 18 people.
“Brazilians are viewing the motorcycle as a part of everyday life instead of a leisure item for the rich to be used on weekends,” said Helio Verde, general manager for motorcycle sales at Honda’s office in Sao Paulo.
Already, production of motorcycles is up this year on optimism that anemic estimated economic growth of 1% to 2% won’t stunt sales.
Motorcycles made by Honda, Yamaha, Hyosong Motors & Machinery of Korea, and Agrale SA, a small domestic manufacturer, rose to 78,341 units in the first two months of 1998, a 52% increase from the same period a year earlier. For all of 1998, production is expected to increase 24%, according to the Brazilian motorcycle industry association, Abraciclo.
“We’re in for a fantastic year,” said Marcos Campos, commercial director for Yamaha in Brazil.
Shifting gears from its traditional strategy in Brazil of marketing its motorbikes as a status-symbol sports accessory, Yamaha, which accounts for about 8% of the Brazilian market, is looking to the country’s massive underclass as potential customers.
After much lower inflation starting in 1994 made installment plans widely available in Brazil for the first time, an estimated 14 million Brazilians gained the ability to buy such consumer goods as refrigerators and washing machines, according to the state-run Institute of Geography and Statistics. Now, many of these consumers are eyeing purchases a notch above, like motorcycles.
Yamaha is investing $10 million this year to upgrade its factory in Manuas, the industrial low-tax zone in the Amazon, and concentrate on its new Krypton 105 model. Its cheapest motorcycle in Brazil, the Krypton costs about 2,400 reais.
Honda, which dominates the market with about 90% of sales, is pursuing a similar strategy. The company will continue to emphasize its cheaper models, like the Titan 125, which costs about 2,900 reais. The Titan already corresponds for about 60% of Honda’s Brazilian motorcycle sales.
Even the cheapest, most basic cars sold in Brazil, the next step up in individual transportation, cost about 10,000 reais when purchased new.
Honda is also studying a second motorcycle plant aside from the one it has in Manaus. If Honda pushes through with the plans, which would require about $70 million in investment, the company would build the factory in Goias, a state in Brazil’s central west with transportation links to the industrialized south as well as the fast-growing northeast, Verde said.
While manufacturers map out their plans, the growth of Brazil’s motorcycle fleet is transforming the fabric of a society that is mainly urban and largely unprepared for the growth in prosperity that has accompanied low inflation for the last four years.
The most visible change, aside from myriad two-wheelers that zip through stalled traffic, often scraping against cars or dislodging side-view mirrors, is the growth of a reckless profession of motorcycle messengers.
“The messengers fill a gap that goes hand-in-hand with companies’ search for greater efficiency,” said Rogerio Aun, a consultant specializing on the automotive industry with A.T. Kearney in Sao Paulo.
Dubbed “motoboys,” a Portuguese hybrid of the borrowed words for motorcycle and office-boy, the messengers, generally between 18 and 25 years old, pride themselves on their fearlessness.
In Brazil, which has one of the world’s highest death rates from traffic accidents, that’s no small feat. But unlike Rio’s nihilistic train surfers who gained notoriety in the days of hyperinflation, the motoboys want to make money.
Olivenaldo Bonfim, for example, said he’ll continue at his job driving a Honda Titan unless he gets injured. And even in that case his company, Bip Express Ltda. of Rio de Janeiro, pays for health and life insurance.
