KTM Asia Motorcycle Manufacturing Inc. (Kammi), a partnership between Ayala Corp. and Europe’s largest motorcycle manufacturer KTM AG, is betting big on the Chinese market, aiming to start exporting to the multibillion consumer market by year-end.
In Asean the export markets initially being eyed for the motorcycle maker’s Philippine-made motorcycles are Thailand and Indonesia, the company’s top official said.
“Later on this year, we’re set to export motorcycles to China and in early 2018, to several Asean countries, as well,” said Kammi President and COO Dino Santos during the launch of KTM AG’s first Southeast Asian facility in Santa Rosa, Laguna.
This was affirmed by KTM Asia Pacific, Middle East and Africa Vice President for sales Peter Perberschlager, noting an initial volume of 10,000 units could be shipped at the start of export operations, which could be doubled to 20,000 units over time.
“We consider the Philippine market as among the biggest consumer markets in the world. We see a growing segment of premium motorcycles, which we see growing stronger in the future,” Perberschlager said.
Kammi is positioning the Santa Rosa facility, which has a maximum capacity of 60,000 units annually as an export hub. Santos said it intends to ship out 80 percent of the motorbikes it will produce locally, with only 20 percent intended for the domestic market.
This way, the company can leverage the preferential tariffs the Philippines is entitled to via the Asean free-trade agreement (FTA) with China, as the company has already achieved the rules-of-origin requirement of having at least a 40-percent regional value content.
“There are economic treaties we feel makes very good business sense. We have hurdled that requirement,” Santos said.
The 40-percent regional content is just the beginning for the company’s strategic vision “to internalize the supply chain,” AC Industrials Chairman Arthur R. Tan said.
Kammi will be exporting motorcycle models with engine displacement of 250cc to 400cc.
Domestic sales for 2017 is estimated at 2,000 units for the year.
In the nine months since Ayala Corp.’s debut in motorcycle manufacturing via the partnership with KTM AG, it has established 21 dealerships in the country and sold more than 500 units.
Santos said this network can grow to 34 dealerships by year-end, with the maximum goal of having 52 dealerships.
Tan said this foray into motorcycle manufacturing is the first step toward the company’s vision for the Philippines becoming a bigger player in the global automotive-value chain.
Kammi has qualified as a participant to the Board of Investments’s new Motorcycle Vehicle Development Program, entitling it to some tariff-related incentives.