According to Reuters, the Japanese government and several Japanese motorcycle manufacturers have issued warnings to Vietnam that Vietnam¡¯s plans to ban gasoline-powered motorcycles in Hanoi could lead to unemployment and disrupt the Vietnamese motorcycle market worth $4.6 billion ($327.7 billion) dominated by Honda.

In order to reduce air pollution, Prime Minister Van Ming issued an executive order in July to ban gasoline motorcycles from mid-2026 from entering the centre of the capital Hanoi; wider restrictions will be introduced by 2028 and the ban is expected to extend to the rest of the country.

In response, the Japanese Embassy in Hanoi sent a letter to the Vietnamese government, saying that the ban may affect employment in supporting industries such as motorcycle dealers and parts suppliers, and urged the Vietnamese government to consider a suitable electrification roadmap, suggesting phased implementation of the ban, and leaving a preparation period.

People ride motorcycles in Vietnam Reuters

A Japanese government official said the letter was forwarded in September, but the Japanese embassy declined to disclose the full contents of the letter and the exact time it was sent.

Similarly, foreign motorcycle manufacturers led by Honda sent a letter to the Vietnamese government as early as July this year, warning that the ban on gasoline motorcycles may lead to production interruptions and bankruptcy risks for companies in the supply chain, affecting the employment of hundreds of thousands of workers, and cited potential disruptions for nearly 2,000 dealers and about 200 parts suppliers.

Motorcycle manufacturers also urged the Vietnam government to implement a transition period for the ban, with a "minimum preparation time of two to three years" to allow companies time to adjust production lines while expanding the charging station network and safety standards.

According to an informed source, a Honda representative privately suggested that the company may consider cutting production in Vietnam in response to the ban. In response, Honda officials said it was closely monitoring developments but did not plan to shut down the factory. Vietnamese officials have so far refused to take action on the demands of the Japanese government and manufacturers.

Honda has four factories in Vietnam, where motorcycle sales dominate, and its brand name has become the abbreviation for "motorcycle" in Vietnamese. Honda's sales in Vietnam fell nearly 22% month-on-month in August after the ban was announced, and rebounded slightly in September. However, compared with the same period last year, Honda's sales in August and September fell by double digits.

As the global auto industry turns electrified and competition intensifies, Honda's auto business profits have been squeezed and it is increasingly dependent on profits from its motorcycle business. Most of the motorcycles currently sold by Honda in Vietnam and around the globe are petrol-powered, but electric models such as the CUV e: and ICON e: are also available.

Meanwhile, sales of electric motorcycles and electric bicycles produced by Vietnamese electric car company VinFast, listed at Nasdaq, reached 70,000 in the second quarter of this year, up by around 55%, according to a consumer survey conducted by market research company Asia Plus in September this year, which expects VinFast sales to explode after the ban.

In addition, the proposed ban has also had an impact on gasoline vehicle sales in Vietnam. Members of Vietnam's largest automobile industry association, VAMA (including several Japanese brands), saw gasoline vehicle sales fall 18% year-on-year in September this year. VAMA said it does not expect the ban on gasoline motorcycles to have a direct impact on cars, but acknowledged that some customers will hesitate to buy gasoline vehicles.

The Vietnamese government has said that the ban is necessary to address the high levels of air pollution in Hanoi.Van Ming told senior Japanese enterprises in August that reducing emissions is a global problem and needs to work together to choose a solution for the right route.In addition to the capital Hanoi, Ho Chi Minh City, Vietnam's largest city, also said plans to limit gasoline vehicles.

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