INDONESIA MOTORCYCLES MARKET – DATA & FACTS 2019
Indonesian Motorcycles in the 2019 is again in the positive track started last year, despite in October and November sales declines, with full year projected near the 6.5 million units. The Government just drew up two targets for the 2025, the 10 million units produced and the 1 million units exported. Just a dream?
Indonesian economy likely continued expanding close to 5% in the fourth quarter, with 100 basis points of rate cuts since June supporting domestic activity. In October, retail sales perked up, while tourist arrivals grew at a healthy pace following a choppy Q3. Moreover, government import substitution policies to limit the current account deficit likely supported the external sector’s contribution to growth. However, signs from the manufacturing sector are downbeat: The PMI was in contractionary territory for the fifth straight month in November amid lower new orders and output. This comes after the external sector buttressed the economy in the third quarter, offsetting softer domestic dynamics.
Economic growth is seen fairly steady next year. While fixed investment is seen gaining momentum on tax incentives and greater infrastructure spending, this will be counterbalanced by a rebound in imports, which will weigh on the external sector. Elevated global trade tensions and a slowdown in China pose downside risks.
2019 Motorcycles Market
The Indonesian industrial sector is back almost optimistic with regard to the future of the motorcycles industry and the recovery in place, started in the 2018, could be supported by factual support.
In a recent speak, the Director of Maritime Industry, Transportation Equipment and Defense Equipment Ministry of Industry (Kemenperin) Putu Juli Ardika, has defined two new targets for the industry by the 2025: the achievement of 10 million production and 1 million export. The first target looks unrealistic without specific incentive support to the industry, while the second could be achieved, starting from the current level.
Indeed, total exports of two-wheeled vehicles during January-October 2019 reached 682.325 units and can end the year over the 0.8 million units.
As far as the domestic market, it should grew up near 9 million in the 2025, from the near 6.5 million projected for the full 2019.
Indeed, after having closed the first half of the 2019 with 3.25 million (+7.4%), in the second half sales keep growing slower and at the end of November reached the 6.17 million units (+3.2%) with both October and November in negative territory.
The Indonesian motorcycles industry is the third in the World since almost twenty years representing the primary private transporting sector for people and goods and having a size 6 time bigger than the automotive industry.
The market hit the record at the end of last decade reaching for the first and lonely time the 8 million units sold in a calendar year. Then the market entered in a mature stage and sales declined progressively, down to the 5.8 million scored in the 2017, the lowest level in the last 15 years, when the increase of fiscal duties have further hit the industry.
However, fueled by a quite positive economic trend, in the 2018 the market has changed the trend taking a positive path and sales finally were back over 6 million units ending the year at 6.38 million sales, up 8.4%.
The market is dominated by Japanese brands with Honda holding 73% of market share (in 2018) and Yamaha at 21%. However, in recent years several new brands landed in the country from India, Europe and US and over 30 brands are imported in the country with sales progressively growing. This is not the case of MV Agusta, which has lost the importers in the 2017 for bankrupt and is struggling to find a new one.
A strong impact is having on the premium segment market the aggressive strategy put in place by KTM supported by the Indian partner (and 48% shareholder) Bajaj Auto. After entering the market in the 2016, the Austrian brand during the 2018 started to supply from the Bajaj Auto’s 100% owned subsidiary PT. Bajaj Indonesia, located in Chakan producing with a CKD system probably aiming to base in Indonesia a hub for the entire region.
At the moment KTM distributes in Indonesia a short line up including the KTM 200 Duke, 250 Duke and the 390 Duke, but increasing the line up the brand should further growth.
During the 2018 Indonesian International Motor Show it was announced the start-up of a new local venture, 100% with Indonesian resources, aiming to boost the electric-powered motorcycles segment. A local enterprise, the PT Wijaya Manufacturing plans to produce 60,000 electric-powered motorcycles in 2019. The company is a collaboration between state-owned enterprise Wijaya Karya Industri dan Konstruksi and private firm Gesits Technologies Indo. Actually Gesits is selling near 1.000 e-scooter per month.
The investments in the low emission vehicles are considered crucial to reduce pollution and to revamp the industry.