Japan's Honda Motor plans to begin producing its UC3 electric scooter in Vietnam as early as September, shifting production from Thailand as the company responds to increasing electrification in one of the world's largest two-wheeler markets, media sources reported.

Sayaka Arai, General Director of Honda Vietnam, told media sources that the company will manufacture the UC3 at its plant in Vietnam's northern province of Phu Tho, although initial production volumes are expected to remain limited.

The move comes as Vietnam gradually promotes lower-emission transportation in major cities. Earlier this month, Hanoi introduced a low-emission zone in the city centre, restricting the use of petrol-powered two-wheelers on weekends.

While the measures were softened from earlier proposals following concerns raised by the automotive industry and are not expected to significantly affect daily commuting at present, they indicate the government's focus on reducing urban emissions.

"The trend toward electrification among consumers is moving forward more than expected," Arai said. "Dealers are seeing a steady increase in people looking for electric two-wheelers."

She further added that higher fuel prices resulting from the US-Iran conflict have further increased consumer interest in electric scooters and motorcycles.

Honda is preparing to launch a new electric two-wheeler model next year as it seeks to increase its share of Vietnam's EV market.

"The best-selling electric two-wheelers are concentrated under VND 30 million (US$ 1,140)," the executive said, indicating that Honda intends to compete in the affordable mass-market segment.

Vietnam remains one of the world's largest two-wheeler markets. Since 2023, annual two-wheeler sales by major manufacturers, including electric models, have remained approximately 20% below their historical peak. Despite the increase in electric vehicle sales, demand for petrol-powered two-wheelers remains substantial.

VinFast, part of Vingroup (HoSE: VIC), is active in Vietnam's electric two-wheeler market.

Arai suggested that the increase in electric two-wheeler sales may partly reflect consumers purchasing additional vehicles rather than replacing their existing petrol-powered two-wheelers.

"There are likely some cases of buyers holding on to gas two-wheelers as they buy electric two-wheelers at more affordable prices, owning more units overall," she said. "There is a possibility we are pulling demand forward, and we still can't predict how that will impact market trends."

Honda and its dealer network are also preparing charging infrastructure to support the rollout of the UC3. The model is currently the only electric two-wheeler that uses the CHAdeMO charging standard, and dealers in Hanoi and other cities are installing charging stations.

"We hope to get charging stations into places such as shopping centres as well," Arai said. "If other companies adopt the standard as well, it would lead to greater interoperability."

In Honda's financial report for the second quarter of its fiscal year ending March 2026, Noriya Kaihara, Director and Executive Vice President of Honda Motor, stated that sales of the company's internal combustion engine (ICE) two-wheelers in Vietnam declined by 10-15% year-on-year in August and September last year due to restrictions on petrol-powered two-wheelers.