KARACHI, Sept 7: The Japanese bike-makers have begun slashing the prices of their products to attract more buyers. The move is aimed at improving market share and customer base at a place overjoyed over entry of the Chinese bikes (local and imported).

Following a cut of Rs2,000 in the CG-125 and Rs4,000 in the CD-70 prices by the Atlas Honda Limited on Monday, the Dawood Yamaha Limited (DYL) too joined the league on Tuesday by announcing a reduction of Rs2,000-3,300. The Suzuki Motorcycle Pakistan Limited (SMPL) is most likely to declare a similar cut, in a day or two.

In last one and a half years, the Japanese bike-manufacturers have been making downward adjustments in their prices. For example, market leader Atlas Honda has reduced price of the CD-70 by Rs14,500 to Rs54,000 from Rs68,500, while the CG-125 price has been brought down to Rs71,000 from Rs78,500.

Market people link the cut by Honda, Yamaha and Suzuki to the entry of Chinese bikes which created a healthy competition, thus proving beneficial for the end-users to select the bikes as per their pockets and savings.

They said that why the Japanese bike makers did not cut the prices when they had the monopoly. They literally kept the demand and supply gap in their hands, knowing that people were bound to buy costly bikes to meet their needs.

Besides, high prices of the Japanese bikes were also a factor in keeping away prospective buyers. They added that the sales of Japanese bikes had picked up due to price cuts, although their balance sheets were showing negative sales figures.

Gone are the days when Honda, Yamaha and Suzuki had virtually ruled the Pakistani roads. Time has now changed. Chinese bikes of various names are now running side by side with the Japanese.

Market sources said that the Japanese bike-makers had smelled that the Chinese bikes were further gaining popularity in the last few months due to the entry of new models at cheaper price. In order to lure more buyers towards the Japanese bikes, price cut was the only tool to attract them.

With the latest cut, the gap between the Japanese and the Chinese bikes of popular 70cc model has shrunk to Rs15,000 which used to be Rs20,000-25,000. Chinese bikes are still cheaper by Rs15,000 as compared to their competitors.

In case the Japanese bike makers further come out with another price decline of Rs5,000 -- the gap will drop to Rs10,000 in a particular 70cc models. Market sources said that the executives of the Chinese bike-makers have put their heads down and are considering reduction in prices owing to a narrowing price gap in a specific 70cc models and to keep the popularity graph up in the market.

Keeping in view the impressive results of the manufactures of Japanese two-wheeler - it has been noticed that entry of the Chinese bikes has so far not given any serious jolt to the market share of Honda, Yamaha and Suzuki.

Sales of Atlas Honda rose to Rs9.9 billion in the year ended June 30, 2004 from Rs7 billion in the corresponding period of last fiscal. Sales of Suzuki bikes surged to Rs867 million for the half year ended June 30, 2004 from Rs489 million in the same period of previous fiscal.

Chief Executive of the Suzuki Motorcycle Pakistan Limited, Midhat Kidwai said that two years back his company was selling 700-800 units per month as compared to current 2,600 units per month.

Similarly, Honda is now selling around 20,000 units a month as compared to 7,000-8,000 a month two years back. Yamaha is now selling around 5,000 bikes per month as compared to 1,800 a month two years back.

"This clearly shows that the Japanese bikes have not been seriously hurt yet by the entry of Chinese bikes. Customers still prefer the Japanese bikes due its quality," he said adding that "the sales of Japanese bikes would have fallen sharply if there was any price factor." A particular segment of the society, having little liquidity, is buying the Chinese bikes.

He said that the total market size (both Japanese and Chinese) has swelled to over 380,000 units in this year as compared to 100,000-120,000 units two years back. By June 2005, the total market size will reach to over 400,000 units.

An authorized dealer of the Atlas Honda at Akbar Road, Naseem Anwar said that sale of Honda has dropped only in Karachi due to theft and snatching cases otherwise sales in the upcountry markets are going swiftly. He did not agree that the sales of Japanese bikes were going up due to price cuts.

He added -- quality standards and the resale value of Japanese bikes also matter most. He said that the Atlas Honda sales two years back were 78,000 units, rising to around 200,000 in the current year. The company is targeting to reach 300,000 units next year.

He said price cut by Atlas is only aimed at further increasing its customer base and it is not due to any fear of market share erosion in the presence of Chinese bikes. Currently 22 Chinese bike-makers are competing with three Japanese assemblers. Japanese bike makers have to gear up efforts for further price cut as many new Chinese bikes (local and imported) are arriving with low prices.