Delivery App Fever Causes Unexpected Shortage of Motorcycles in Brazil

RIO DE JANEIRO, BRAZIL – The novel coronavirus pandemic has produced an unexpected imbalance in the motorcycle market. Production plummeted, with the suspension of plant activities to protect employees from the risk of infection.

However, demand for motorcycles was driven by delivery services, which grew during the social isolation period. As a result, there was a shortage of motorcycles in the market, in particular the cheapest models (up to 150 ccs), to meet the growing demand from delivery companies.

“The transport of lightweight containers, medicines, and food has greatly increased. But there are no motorcycles for sale because there is a production shortage,” says Alarico Assumpção Júnior, president of the National Federation of Motor Vehicle Distribution (FENABARVE).

Motorcycle production, which is mainly concentrated in Manaus, had an average monthly output of 92,000 units in 2019. In April this year, only 1,400 motorcycles left the production lines; in May, there were 14,600, according to data from ABRACICLO, an association that represents the motorcycle and bicycle segment.

While production was virtually paralyzed, the use of motorcycles for professional purposes grew considerably. “Motorcycles were already a well incorporated vehicle in Brazilian society, with a 25 percent share in the operating vehicle fleet. Now, it has become instrumental in allowing many families to remain home,” said Marcos Fermanian, president of ABRACICLO.

There has been no explosion in the sale of motorcycles in Brazil, but rather an imbalance between supply and demand because of the radical cut in production – the plants were virtually shut down in April, while they produced only one sixth of the 2019 average in May. In contrast, 28,800 motorcycles were sold in April; in May, the total was 28,000.

As a result of the imbalance, prices increased. In June, motorcycles were 1.12 percent more expensive than in May, well above the 0.26 percent inflation rate, according to the IBGE’s (Brazilian Institute of Geography and Statistics) National Consumer Price Index (IPCA).

Motorcycle couriers feel the impact of shortages in practice. Wesley Amaro de Souza, 26, bought a motorcycle in April for R$12,000. “In December, my cousin managed to buy it for something around R$10,000. And a week after I bought mine, an acquaintance paid R$13,000 for the same model,” he said.

Wesley intends to place a red [commercial] license plate on the vehicle, so he can earn a little more on the services. “Some companies ask for the red plate as a requirement for the job,” he says. Because of delays by Detran, the motor vehicle agency, in providing services during the pandemic, he still has not managed to license the vehicle, which prevents it from traveling.

His current deliveries are not operated by apps. Married to a photographer, he delivers his wife’s photo albums to her clients – which ultimately reduces the cost of her work. “I had the job secured, but since I didn’t manage to get the license plate yet, I eventually lost it.”

Standardization

With the reduction in the record of cases and deaths in the capital of Amazonas – which had one of the highest rates of Covid-19 infection per total population in Brazil – the president of ABRACICLO believes that the market will rebalance.

The June results already corroborate Fermanian’s outlook. Production last month reached 78,000 units, a number much closer to last year’s average and above total sales, which reached 45,500 units – an increase of 57.1 percent over May, but a drop of 42.7 percent over last year’s June performance.

The representative of ABRACICLO also said that a stronger rebound in retail sales will help increase motorcycle sales in Brazil in the coming months.

Source: Estadão Conteúdo