Following a sales slump caused by the recession, motorbike sales in Indonesia are growing again. In August, sales totalled 626,478 units, a 2.4 per cent rise year on year, according to the Indonesia Motorcycle Industry Association. The spike in growth has prompted market leader Astra Honda Motor to revise 2009 industry sales forecasts to 5.3 million units, from a gloomier 4.5 to five million units earlier.
In Jakarta, soaring motorbike ownership is causing congestion, and newspapers quote Government planners predicting total gridlock as early as next year.
“Jakarta is number one in per capita ownership, while Java accounts for 40 per cent of sales,” says Mario Montino, from the automotive and transportation practice at Frost & Sullivan. “In 2006, national ownership was one motorcycle per 10.2 people. The prediction for 2010 is one per 7.4 people.”
The sales spike followed a series of interest rate cuts. Credit is crucial; just 13 per cent of bikes are bought using cash.
Indonesia’s largest syndicated survey, Roy Morgan Single Source, estimates that 35 million households have motorcycles. The wealthy drive cars, so motorcycle ownership is divided nearly equally between middle- and lower-income households, with the former purchasing new machines and the latter, especially in rural Indonesia, shopping second-hand.
The entry-level bike is the bebek - literally ‘duck’ in Bahasa Indonesian. Low-priced, with engines in sizes of 100cc to 150cc, bebeks once accounted for more than 90 per cent of new motorcycle sales. But with a growing middle class turning to larger bikes, especially those with automatic transmissions, the market share of manual-clutch bebeks dropped to 65.8 per cent of the 6.3 million units sold last year. Mid-sized 110cc and 125cc bebeks with automatic transmissions enjoyed the strongest growth, capturing 25.7 per cent.
The Roy Morgan survey suggests that one driver of the market might be first-time female buyers. One in four motorcycle riders are women, according to the survey, and of the respondents who intend to purchase a motorcycle in the next four years, 43 per cent are female.
Honda and its Japanese rivals Yamaha and Suzuki have long dominated Indonesia’s motorcycle market. Together they account for more than 90 per cent of sales, with products at all price points. Last year Honda and Yamaha had production shares of 45.9 per cent and 40.2 per cent, respectively.
“The Japanese entered the market at the right time,” explains Robby Susatyo, MD at Synovate Indonesia. “Back in the 1970s, when European and US brands were losing popularity because of their inefficient fuel consumption, the Japanese came in with low price, strong fuel economy and great styling.”
These brands have maintained adspend through the downturn. TV, newspaper and magazine spend totalled Rp863.3 billion (US$91.5 million) from January to July, according to Nielsen; at that rate across 2009 it will nearly reach the record Rp1.6 trillion in 2008.
According to Amalia Susilowati, MD of Euro RSCG Indonesia, which works with Honda, Yamaha has been aggressively challenging Honda by targeting the young and signing up celebrities such as motorcycle racer Valentino Rossi. “Decision-makers used to be the parents, and communications to them focused on safety and value for money. Brands never talked about speed,” she says. “Yamaha has changed this. It is targeting youth by talking about speed, acceleration and style.”
Yamaha, then, has become the sexier of the two marques, and the brand has reinforced this by trying to build communities of Yamaha bikers. Yet Honda’s strength, says Susilowati, remains its pricing and its after-sales service.
Brands from other markets are trying to gain share; last year India’s TVS launched two models. But they face legacy issues, explains Susatyo. “Chinese, Korean and Indian brands attempted to grab share in the late 90s, but they committed suicide by selling poor quality products that only lasted for a few months on the road.”
Got a view?
Email [email protected]
This article was originally published in 22 October 2009 issue of Media.
In Jakarta, soaring motorbike ownership is causing congestion, and newspapers quote Government planners predicting total gridlock as early as next year.
“Jakarta is number one in per capita ownership, while Java accounts for 40 per cent of sales,” says Mario Montino, from the automotive and transportation practice at Frost & Sullivan. “In 2006, national ownership was one motorcycle per 10.2 people. The prediction for 2010 is one per 7.4 people.”
The sales spike followed a series of interest rate cuts. Credit is crucial; just 13 per cent of bikes are bought using cash.
Indonesia’s largest syndicated survey, Roy Morgan Single Source, estimates that 35 million households have motorcycles. The wealthy drive cars, so motorcycle ownership is divided nearly equally between middle- and lower-income households, with the former purchasing new machines and the latter, especially in rural Indonesia, shopping second-hand.
The entry-level bike is the bebek - literally ‘duck’ in Bahasa Indonesian. Low-priced, with engines in sizes of 100cc to 150cc, bebeks once accounted for more than 90 per cent of new motorcycle sales. But with a growing middle class turning to larger bikes, especially those with automatic transmissions, the market share of manual-clutch bebeks dropped to 65.8 per cent of the 6.3 million units sold last year. Mid-sized 110cc and 125cc bebeks with automatic transmissions enjoyed the strongest growth, capturing 25.7 per cent.
The Roy Morgan survey suggests that one driver of the market might be first-time female buyers. One in four motorcycle riders are women, according to the survey, and of the respondents who intend to purchase a motorcycle in the next four years, 43 per cent are female.
Honda and its Japanese rivals Yamaha and Suzuki have long dominated Indonesia’s motorcycle market. Together they account for more than 90 per cent of sales, with products at all price points. Last year Honda and Yamaha had production shares of 45.9 per cent and 40.2 per cent, respectively.
“The Japanese entered the market at the right time,” explains Robby Susatyo, MD at Synovate Indonesia. “Back in the 1970s, when European and US brands were losing popularity because of their inefficient fuel consumption, the Japanese came in with low price, strong fuel economy and great styling.”
These brands have maintained adspend through the downturn. TV, newspaper and magazine spend totalled Rp863.3 billion (US$91.5 million) from January to July, according to Nielsen; at that rate across 2009 it will nearly reach the record Rp1.6 trillion in 2008.
According to Amalia Susilowati, MD of Euro RSCG Indonesia, which works with Honda, Yamaha has been aggressively challenging Honda by targeting the young and signing up celebrities such as motorcycle racer Valentino Rossi. “Decision-makers used to be the parents, and communications to them focused on safety and value for money. Brands never talked about speed,” she says. “Yamaha has changed this. It is targeting youth by talking about speed, acceleration and style.”
Yamaha, then, has become the sexier of the two marques, and the brand has reinforced this by trying to build communities of Yamaha bikers. Yet Honda’s strength, says Susilowati, remains its pricing and its after-sales service.
Brands from other markets are trying to gain share; last year India’s TVS launched two models. But they face legacy issues, explains Susatyo. “Chinese, Korean and Indian brands attempted to grab share in the late 90s, but they committed suicide by selling poor quality products that only lasted for a few months on the road.”
Got a view?
Email [email protected]
This article was originally published in 22 October 2009 issue of Media.
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