Ayala signs $2-M deal to manufacture motorcycles 6
Photo courtesy of KTM Official Facebook page

MANILA - While the rest of the world is fretting over a slowing Chinese economy and weakening global demand, the Ayala Corporation is seeing only opportunity.

The Ayala group has signed a $2 million joint venture deal with Austrian motorcycle company KTM to build motorcycles in the Philippines, primarily for export to China.

Ayala will control 65 percent of the joint venture, and it will manufacture the bikes in the Integrated Micro Electronics Inc. (IMI) plant in Laguna.

The joint venture aims to start production by January 2017. It wants to set up a showroom and start sales by the last quarter of this year.

While the joint venture is targeting China's market of 60 million motorbikes sold per year, Ayala Corp. chairman Jaime Augusto Zobel de Ayala said the real objective is to take advantage of a shift in how manufacturing is being done.

"There will always be demand for motor vehicles, but what we are seeing right now is a tech shift in how motor vehicles are manufactured. Not all manufacturing sectors are equipped to produce the electronic systems of the new designs being rolled out. IMI has that capacity, and through IMI and this venture, we will be able to fill the demand for more connected and tech- centered vehicles," he said.

Zobel de Ayala said IMI is already a major player in automotive electronics, and he said this venture will be the first time the Ayala group will use that expertise to build a whole vehicle.

The first two production lines in Laguna will be dedicated to smaller motorcyles, 200cc and 390 cc.

The Laguna plant will be the third production facility of KTM in the world. The first facility is located in Austria while the second is in India. The Philippine operation will cater to ASEAN and China.

The launch comes after the release of new economic data from China, showing the largest economy in this part of the world growing at its slowest pace since 2009.

Arthur Tan, president of IMI, said their operations in China have felt the effects of the slowdown, but he is not at all dismayed by it.

"This is part of a transition that is a good thing, the Chinese government is cleaning up the system, ensuring an equal playing field, improving its banking systems. IMI is benefiting because competition is shying away from the challenge of adapting, we are meeting it and garnering more business," he said.

Aside from building the bikes, IMI will also be taking part in the design stage of the motorcycles, specifically electronics systems that would enhance safety and maneuverability.

The first of the Philippine-designed KTM bikes should be rolled out in four years.