In the face of a challenging economic landscape and soaring living costs, the demand for electric vehicles in Europe witnessed a decline. The automotive industry, including electric motorcycle manufacturers like Vmoto (ASX: VMT) and sparing no automobile giants, experienced the impact of the recessionary environment. Vmoto’s sales in 2023 dropped by 14% compared to the previous year, with a total of 8,292 units sold. Its only silver lining was a 6% increase from the sales in 2021.
The international market figures also reflected the tough times, with total units sold in 2023—amounting to 4,820—plummeting by 44% from the corresponding period in 2022 and a 36% drop compared to 2021. The downturn was particularly evident in Europe, which stands as Vmoto’s largest market. However, amidst these economic headwinds, Vmoto sees a glimmer of hope through the full status of its newly established United Kingdom (UK) subsidiary, effective from July 2023. This strategic development is expected to pave the way for a progressive increase in sales units within the UK, partially offsetting the current sales decline in mainland Europe.
Acknowledging the challenges, Vmoto has actively promoted its electric vehicle (EV) products not only in its established markets but also in emerging markets beyond Europe. Interestingly, the Company noticed growing interest in its products and a surge in orders from Asian and South American markets, as well as from new B2B businesses. In July, Vmoto signed a Memorandum of Understanding (MOU) with Ni Hsin EV, facilitating the assembly, marketing, and distribution of Vmoto’s F01, CPX Pro, and TC Max electric motorcycle models in Malaysia.
The expanding interest from these markets reinforces Vmoto’s commitment to its international expansion efforts. By managing existing markets and venturing into new regions, the Company aims to navigate the current market environment and capitalise on emerging opportunities for sustained growth. Furthermore, Vmoto views the current downturn in Europe as a temporary setback, remaining optimistic about the robust long-term trend for electric vehicles.
During Q2 FY23, which ended in June, Vmoto signed and renewed a distribution agreement with an international distributor in Guatemala, encompassing the warehousing, distribution, and marketing of its B2C range of electric two-wheel vehicles. Moreover, the Company is presently in advanced discussions to finalise distribution agreements with distributors in Cambodia and Thailand, signaling a commitment to expand its footprint in these promising markets.
Despite the recent decrease in international sales, particularly in Europe, the Company remained operationally cash flow positive for the quarter, reflecting stable margins for products sold and an ongoing focus on cost control.
As of June 30, 2023, Vmoto had firm international orders for 4,341 units, which are scheduled for delivery in Q3 FY23. However, the Company anticipates a material decline in international sales compared to Q3 FY22, which ended in September.
Its financial position remains strong, with a closing cash position of $28.2 million as of June 30, 2023, and no bank debt. This comes even after the Company made payments to acquire industrial land in the Lishui Economic Development Zone in Nanjing, China.
As the global focus on electric vehicles continues to gain momentum, Vmoto can hope to hit the accelerator on its EV production again.
Alinda is a Business Reporter for The Sentiment
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