Indonesia March. Two-Wheeler market boomed 15% in the first quarter. Honda shines

Indonesia Motorcycles

Indonesian Motorcycles market boomed in the first quarter 2019 reporting sales up 15%. The market benefit from the impressive +19% reported for the market leader Honda, while the key competitor, Yamaha, has lost terrain. The full year is now projected over the 7.0 million units.

 

Economic Environment

Indonesian economy likely grew strongly in the first quarter of the year. Private consumption should have performed well, boosted by low inflation and government fiscal support to low-income families; indeed, retail sales growth was elevated in January and February. Moreover, tourist arrivals were buoyant in the same two months. On the other hand, manufacturing was soft, with the PMI averaging lower in Q1 than in Q4 2018 amid ebbing global growth.

Economic growth will be firm this year, underpinned by strong private consumption and investment. Moreover, the external sector should strengthen as import growth softens after last year’s surge. Potential delays to infrastructure projects, global trade tensions and uncertain momentum in China pose downside risks.

 

2019 Start

The start of the 2019 for the Indonesian motorcycles market was above expectations. Indeed combined sales between local producers and importers have been 573.444 (+17.8%) in January, 536.176 in February (+20.8%) and 581.595 in March (+7.8%) ending the first quarter with 1.691.215 units (+15.0%).

The market has been pulled up by the leader, Honda, which reported an impressive +19% in the quarter with over 1.250.000 sales.

 

Market Trend

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.

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 an hub for the entire region. At the moment KTM distribute in Indonesia a short line up including the KTM 200 Duke, 250 Duke and the 390 Duke. It is almost possible the plant will start to produce the Bjaj Auto Pulsion 220 to be distributed in Indonesia.

During the last Indonesia 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.

The investments in the low emission vehicles are considered crucial to reduce pollution and to revamp the industry.

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