Similar to the automotive market, the two-wheeler market in Southeast Asia has long been dominated by Japanese brands. Currently, several countries in the region are actively promoting the electrification transformation of two-wheelers, significantly impacting traditional Japanese motorcycle companies. Meanwhile, local Southeast Asian companies and Chinese manufacturers are actively positioning themselves to seize the new opportunities brought by the &#34;oil-to-electric&#34; transition.
<h2>Japan Issues a Warning</h2>
According to a report by Reuters on the 21st, the Japanese government and some motorcycle manufacturers have warned Vietnam that the measures planned by Hanoi to restrict gasoline-powered two-wheelers could lead to job losses and disrupt the Vietnamese two-wheeler market dominated by Japanese companies.
Vietnam is one of the countries with the highest per capita motorcycle ownership in the world and is also one of the largest motorcycle markets globally. Data from Indian market research firm Mordor Intelligence shows that the value of the Vietnamese motorcycle market reaches USD 4.6 billion.
According to Vietnam News Agency, in response to severe air pollution, based on an administrative order issued by Prime Minister Pham Minh Chinh, gasoline motorcycles will no longer be allowed to operate within the inner ring road of Hanoi starting July 1, 2026; by 2030, all personal vehicles using fossil fuels will be prohibited from operating within the outer ring road of Hanoi. Ho Chi Minh City plans to replace 400,000 gasoline motorcycles with electric two-wheelers by 2028. The ban is expected to extend to other regions across the country.
Japan's Kyodo News reported on the 21st that the Vietnamese government stated that electric vehicles are the future of Vietnam. Vietnam's goal is to achieve electric power for more than one-fifth of motorcycles nationwide by 2030.
This &#34;ban&#34; has raised significant concerns among Japanese companies that dominate the Vietnamese market. Honda holds about 80% of the Vietnamese motorcycle market share, with sales reaching 2.6 million units last year. This Japanese manufacturer has four factories in Vietnam, and its brand name has become synonymous with &#34;motorcycle&#34; in Vietnamese. Almost all motorcycles sold by the company in Vietnam and other regions are powered by gasoline.
<img src="https://imageproxy.pbkrs.com/https://img.huanqiucdn.cn/dp/api/files/imageDir/a4d5f863b34e3362d0bcf6a99a23955cu5.jpg/query-aW1hZ2VWaWV3Mi8yL3cvMTI2MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://img.huanqiucdn.cn/dp/api/files/imageDir/a4d5f863b34e3362d0bcf6a99a23955cu5.jpg/query-aW1hZ2VWaWV3Mi8yL3cvMTI2MA"/> On August 31, local time, in Hanoi, Vietnam, people ride electric two-wheelers in an old shantytown. Source: Visual China
Insiders revealed that Honda is leading the call for the Vietnamese government to amend the ban. Honda and Yamaha believe that Vietnam's electrification timeline is too rushed.
Reuters reported that the Japanese embassy in Vietnam sent a letter to the Vietnamese government stating that the ban could &#34;affect employment in industries such as motorcycle dealers and parts suppliers.&#34; The Japanese embassy also urged the Vietnamese government to consider formulating an appropriate electrification &#34;roadmap.&#34;
In fact, as early as July, the Vietnam Foreign Motorcycle Manufacturers Association, led by Japanese companies, sent a letter to the Vietnamese government warning that the ban could lead to &#34;production disruptions and bankruptcy risks&#34; for companies in the supply chain. They called for a preparation period of two to three years for relevant companies to adjust their production lines, expand the charging station network, and establish safety standards
In response to concerns from Japanese companies, Fan Mingzheng stated to executives of Japanese firms in August that emissions reduction is a global issue that requires joint efforts to choose the best solutions and appropriate roadmaps.
Reuters analysis suggests that Honda's automotive business is being squeezed due to intensified competition from the global shift to electric vehicles, and the company is increasingly relying on its motorcycle business as a source of profit. Honda cannot afford to lose its dominant position in the Southeast Asian market.
The Southeast Asian motorcycle trading website iMotorbike states that in Southeast Asia, motorcycles are not just a means of transportation; they are crucial to the daily lives of locals, powering commuting, livelihoods, and the entire economy. Honda, Yamaha, Suzuki, Kawasaki, and India's TVS are the five giants in the Southeast Asian motorcycle market, accounting for about 80% of the market share.
However, under the wave of electrification, several Southeast Asian countries have proposed goals for the electrification of motorcycles. The American motorcycle news website &#34;RideApar&#34; reported that Indonesia has 133 million registered motorcycles. Indonesia plans to reduce its carbon footprint by 29% by 2030 and achieve zero emissions by 2060. Therefore, the Indonesian government sees two-wheeled vehicles as a key starting point for reducing carbon emissions. The Indonesian government has launched a plan to convert fuel-powered two-wheelers to electric two-wheelers, setting a goal of converting 20% of fuel two-wheelers to electric vehicles by 2025.
Data from Statista shows that Thailand sells about 1.8 million motorcycles annually, making it the third-largest market in the region after Vietnam and Indonesia. The Thai government is vigorously promoting transportation electrification, aiming to increase the proportion of electric vehicles in new car sales to 50% by 2030 and achieve 100% electrification of new car sales by 2035. This plan covers all vehicle types from tuk-tuks to large trucks.
<h2>Japanese Companies' Response Strategies</h2>
The concerns of Japanese companies are not unfounded. According to the Vietnam News, Honda Vietnam reported that in September, its motorcycle and automobile sales fell by 11.4% and 52.8% year-on-year, respectively. From April to September 2025, the company's cumulative motorcycle sales were nearly 1.03 million units, a decrease of 0.2% compared to the same period last year.
According to Reuters, Honda stated that it is closely monitoring the situation but has no plans to close factories. A Honda representative revealed that the company is considering the possibility of reducing production in Vietnam.
Vietnam News Agency reported that against the backdrop of a ban on fuel motorcycles, there will be significant changes in the behavior of manufacturers and consumers in the short term. Manufacturers will accelerate the transition to electric vehicles and clean energy transportation. Meanwhile, fuel vehicle dealers may speed up inventory clearance through promotions and price reductions. The sales network for electric vehicles will also further expand into major cities such as Hanoi and Ho Chi Minh City.
Quoc Si Da, an expert in the automotive and motorcycle sector in Vietnam, told Vietnam's Industry and Trade Magazine that if manufacturing companies fail to adjust their strategies in a timely manner and increase investment in green technologies, they may lose market share and even be forced to exit the Vietnamese market; conversely, those companies that lead in transformation and actively innovate will have the opportunity to become industry leaders. Meanwhile, the sales system will also have to shift focus towards electric vehicles
Maintenance centers, charging stations, and after-sales service outlets will increasingly proliferate. Traditional fuel vehicle dealers may be forced to exit the market if they cannot adapt to new trends. Qushida believes that urban residents will quickly turn to electric vehicles, which will become an irreversible trend.
To maintain its market presence in Vietnam, Honda has launched a low-power electric motorcycle model called ICON e. Sales of the ICON e began in various locations in Vietnam on April 1 of this year. However, as of July, the cumulative sales of this model were only about 600 units, which remains at the initial stage relative to Vietnam's large market size.
Japanese media analysis suggests that Vietnam's &#34;oil-to-electric&#34; policy for two-wheelers will continue to be implemented and deepened. If Japanese companies want to maintain their market share, they need to simultaneously address the relationship between product launches, supply chain adjustments, and changes in consumer behavior.
In the overall Asian market, motorcycle demand is mainly concentrated in India, China, and Southeast Asia. The Indian government has also proposed increasing the proportion of electric vehicles by 2030 and promoting market development through purchase subsidies and charging network construction. Against this backdrop, Japanese companies are accelerating their entry into the electric motorcycle market. Since local companies have a grasp of consumer demand and sales networks, Japanese firms are attempting to reduce market entry costs and risks through minority shareholding and other cooperative methods.
Japanese media reports that Japanese companies are maintaining their existing fuel vehicle businesses while seeking responses in the electric vehicle sector. For Japanese companies, advancing electrification while maintaining the market will become a major issue in the near future.
<h2>Southeast Asian Local and Chinese Manufacturers Actively Layout</h2>
Against this backdrop, the Vietnamese two-wheeler market is undergoing changes. Whether it is VinFast, an electric vehicle company supported by Vietnam's largest conglomerate VinGroup, or startups like Dat Bike, or some Chinese manufacturers, all are betting on the future of electric two-wheelers. Currently, local manufacturers VinFast and Pega account for 70% of electric two-wheeler sales.
According to Kyodo News, since the announcement of the ban, sales of electric motorcycles in Vietnam have surged, and local manufacturers like VinFast are expected to profit from this. According to Vietnam's Thanh Nien News, new electric motorcycle sales in Vietnam are expected to grow nearly 100% year-on-year in the first half of 2025. In the first six months of this year, VinFast's electric motorcycle sales accounted for over 55% of the total market sales. In February of this year, VinFast's ride-hailing company Green SM surpassed Singapore's ride-hailing company Grab to become the market leader in Vietnam.
According to The Japan Times, to meet the growing demand for electric motorcycles in the local market, Vietnamese electric motorcycle manufacturer Dat Bike is expanding its business scale. The company has secured $22 million in new financing and is competing in the world's fastest-growing two-wheeled electric vehicle market against established Japanese companies like Honda and Yamaha. Dat Bike founder Nguyen Kinh Son stated that Dat Bike is targeting Thailand as its first market outside of Vietnam, with plans to launch a pilot project by the end of this year and officially enter the market in 2026
According to the Nikkei Asia Review, competition between Chinese and Japanese companies in the Southeast Asian market is becoming increasingly fierce, not only in the automotive sector but also in the two-wheeler sector. In May of this year, Yadea's new factory in the North Bang Phli Industrial Park in central Thailand began operations. The factory plans to achieve a production capacity of 600,000 electric vehicles over the next three years. Meanwhile, Yadea is also vigorously building its sales network. Data shows that in 2024, China's electric two-wheeler export volume increased by 47% year-on-year, with sales to Asia growing by 4%. Southeast Asian countries such as Vietnam and the Philippines are promoting the use of electric vehicles to address pollution issues, providing support for China's electric vehicle exports.
Shen Yu, Secretary-General of the Electric Vehicle Foreign Trade Association in Xishan District, Wuxi City, and Executive Director of Yadea Technology Group, stated in an interview with Global Times on the 22nd, &#34;I believe that the wave of 'oil-to-electric' in the Southeast Asian two-wheeler sector will inevitably impact the profitability of traditional gasoline motorcycle companies. From a market perspective, when policy guidance, consumer demand, and technological iteration converge, companies relying on traditional paths will face structural challenges.&#34; He noted that Yadea's decision to invest in large manufacturing bases in Vietnam, Indonesia, and Thailand is based on the trend and strategic opportunities of future electrification development. For Southeast Asian consumers, the purchase cost of electric vehicles is lower, and the three-year operating cost saves over 40% compared to gasoline vehicles, which will accelerate the penetration of electrification. In the short term, the Southeast Asian market is still dominated by gasoline vehicles, but in the long term, electrification is an irreversible trend in the transportation sector of Southeast Asia.
Shen Yu believes that Chinese manufacturers and local Southeast Asian manufacturers already possess the core capabilities to seize the &#34;oil-to-electric&#34; opportunity. China's electric vehicle industry has built the most complete global technology system and industrial chain advantages—from batteries and motors to intelligent control systems—forming a full-chain competitiveness of &#34;R&amp;D - manufacturing - service.&#34; Chinese brands, leveraging their full industrial chain advantages, have formed competitiveness in price and technology through localized production and the &#34;intelligent products + ecosystem&#34; model (intelligent models + battery swap networks); local Southeast Asian companies can rely on policy dividends and build unique competitive advantages through their keen response to policy guidance and deep understanding of consumer habits.
Author of this article: Wang Tianqing, Xin Bin, et al., Source: Global Times, Original title: &#34;Financial Observation: Southeast Asia's Two-Wheeler 'Oil-to-Electric', Japanese Companies Suffer&#34;
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The Southeast Asian two-wheeler market is undergoing an electrification transformation, facing challenges from traditional Japanese brands. The Vietnamese government plans to restrict the use of fuel motorcycles starting in 2026, aiming for 1/5 of motorcycles to be electrified by 2030. Japanese companies such as Honda and Yamaha have expressed concerns, believing that the pace of electrification is too fast and may impact employment and market structure. Vietnam is an important country in the global motorcycle market, with a market value of USD 4.6 billion

- Southeast Asia's two-wheeler market, traditionally dominated by Japanese brands, is undergoing a shift towards electric vehicles (EVs) as local and Chinese manufacturers seize new opportunities.  
- The Vietnamese government plans to ban gasoline-powered motorcycles in urban areas by 2026, prompting concerns from Japanese firms like Honda, which holds an 80% market share.  
- As local companies like VinFast and Dat Bike expand, the region's transition to electric mobility is expected to accelerate, challenging traditional manufacturers to adapt or risk losing market presence.

Southeast Asia's two-wheeled vehicles "oil to electric," Japanese companies are complaining