UPDATE 1-Yamaha to boost Vietnam motorcycle output 50 pct

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TOKYO, July 30 (Reuters) - Japan's Yamaha Motor Co. (7272.T) will start operations at a second motorcycle factory in Vietnam in October 2008, boosting output by 50 percent in a country that has become the fourth-biggest motorcycle market in the world.

Yamaha, the world's second-largest motorcycle maker after Honda Motor Co. Ltd. (7267.T), said it would invest 5.4 billion yen ($46 million) to build the new plant, which will boost its annual production capacity in Vietnam to 700,000 units.

A Yamaha spokesman said the new factory would be located in Hanoi and would assemble motorcycles. Its existing plant in Vietnam will focus on making parts. All output will be for sales in Vietnam, he said.

Earlier this month, Honda said it would spend about $65 million to start operations at a second motorcycle factory in Vietnam during the second half of 2008, lifting its annual output by 50 percent to 1.5 million units.

Demand for motorcycles has been increasing rapidly in Vietnam in step with its fast-growing economy. The market grew 31 percent in 2006 to 2.3 million motorcycles in 2006, according to a recent estimate by Honda.

Yamaha said its motorcycle sales in Vietnam grew 46 percent in 2006 to 350,000 units, and it sees a 24 percent rise this year.

((Reporting by Taiga Uranaka, editing by Mike Miller; Reuters messaging: nathan.layne.reuters.com@reuters.net; +81-3-3432-8231, nathan.layne@reuters.com))

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