9 December 2019 (closed)
USD/IDR (14,042) +17.00 +0.12%
EUR/IDR (15,644) +86.26 +0.55%
Jakarta Composite Index (6,193.79) +6.92 +0.11%
Domestic sales of motorcycles in Indonesia fell 11 percent to 580,288 units in January 2014. The main reason for this decline in the first month of the year were severe floods brought about by high rainfall amid a peak of the rainy season. These weather conditions disrupted the distribution of motorcycles from factories to dealers. As a result, all motorcycle brands recorded lower sales figures according to data released by the Indonesian Motorcycle Industry Association (Aisi). However, more factors were at play.
Apart from disrupted distribution networks, which blocked the distribution of motorcycles, movement of people and caused higher-than-average January inflation (1.07 percent), tighter monetary policy of the central bank (Bank Indonesia) as well as the significantly depreciated rupiah exchange rate also contributed to declining domestic motorcycle sales.
Bank Indonesia introduced a higher down-payment policy in 2012. This had a serious impact on motorcycle sales as the majority of buyers use a loan to finance the purchase. Moreover, in the course of 2013, the central bank raised its benchmark interest rate (BI rate) from 5.75 percent to 7.50 percent as a measure to combat high inflation (which hollows people's purchasing power). The higher interest rate environment makes people think twice before purchasing a motorcycle as the monthly interest rate is higher than before. As inflation is still rather high (8.22 percent year on year in January 2014) and further Federal Reserve tapering in combination with higher interest rates in the USA can jeopardize financial stability in Indonesia, the central bank may raise its benchmark again in the first quarter of 2014.
The weak Indonesian rupiah exchange rate, which depreciated over 21 percent against the US dollar in 2013, makes factories and dealers raise prices as various components of motorcycles need to be imported (in US dollars). The Aisi also said that the higher transfer tax rate (Bea Balik Nama/BBN) is another reason for higher motorcycle prices since the start of the year.
The forecast for total motorcycle sales in Indonesia this year has been revised down to 7.7 million units by Aisi's Chairman Gunadi Sindhuwinata, thus more-or-less stagnant compared to last year's result. However, there are also analysts who claim that the election year will provide a boost to motorcycle sales. In April and July 2014, legislative and presidential elections will be held in Southeast Asia's largest economy.
Motorcycle sales in Indonesia are dominated by Astra International, one of the country's largest diversified conglomerates. The company - through its subsidiary Astra Honda Motor - has the exclusive right to sell Honda motorcycles in Indonesia. Last year, the Honda brand dominated domestic motorcycle sales with a market share of 61 percent, followed by Yamaha (32 percent), Suzuki (5 percent), Kawasaki (2 percent) and TVS (<1 percent). Thus, four Japanese brands control almost 100 percent of Indonesia's motorcycle sales market.
|Motorcycle Sales in Indonesia
| - Honda
| - Yamaha
¹ January 2014 motorcycle sales only
Source: Indonesian Motorcycle Industry Association (AISI) and Astra International