Vietnam, one of the countries with the highest ratio of motorcycles to population in the world, is on the verge of serious economic and social upheaval. The government's plans to ban gasoline motorcycles in central Hanoi starting in mid-2026 have sparked a sharp reaction from the Japanese government and key automakers that dominate the market.
Vietnam's two-wheeler market is estimated to be worth a whopping $4.6 billion this year. Motorcycle registrations have reached almost 80 million - a phenomenal figure for a population of 100 million. This market is tightly controlled by Japanese giants, with Honda the undisputed leader with around 80% market share.
The sudden introduction of the ban, expected to be extended to the entire capital by 2028 and potentially to other regions thereafter, has raised serious concerns about economic “side effects”.
The Japanese embassy in Hanoi sent an official letter warning that the sudden implementation of the ban could “affect employment in related industries such as motorcycle trade and parts suppliers”. The Japanese side is pushing for an “appropriate roadmap” for electrification that includes a transition period and a phased introduction of the regulations.
The main trade association of foreign two-wheeler manufacturers in Vietnam, led by Honda, Yamaha and Suzuki, has also appealed to the government. They warn of possible “production disruptions and risks of bankruptcies“ along the supply chain, which includes nearly 2,000 dealers and about 200 component suppliers. Manufacturers are pushing for a transition period of “at least two to three years” to allow time to re-adjust production lines, build the necessary network of charging stations and implement safety standards.
Although Honda has not officially announced plans to close factories, the company's sales in Vietnam fell by nearly 22% in August compared to July, immediately after the directive was announced. This decline, although followed by a slight recovery in September, shows the immediate impact on the market.
Meanwhile, local Vietnamese electric vehicle manufacturer VinFast is reporting strong growth. The company’s sales of electric bicycles and scooters jumped 55% year-on-year in the second quarter of 2025, reaching nearly 70,000 units. Consumer surveys also predict a surge in demand for electric vehicles, positioning local players as potential beneficiaries of this regulatory change.
It’s not just the two-wheeler market that is being affected. According to the Vietnam Automobile Association (VAMA), warnings about the ban are already having an impact on passenger car sales. In September, gasoline car sales among the association’s members fell 18% year-on-year.
The Vietnamese government, for its part, defends the decision as necessary to combat high levels of air pollution in Hanoi. Despite pressure from Japan and industry, authorities have yet to publicly respond to requests to delay or change the timetable, and according to Reuters sources, they have temporarily not agreed to the proposals.
The tentative timetable and format for this ambitious transition to electrification remain a matter of intense negotiation and uncertainty for millions of consumers and hundreds of thousands of workers.