Indonesian Motorcycles in the 2019 kept the positive pathway taken in the previous year and sales grew up at 6.5 million units, up a little 1.3%. he Government just drew up two targets for the 2025, the 10 million units produced and the 1 million units exported. Honda controls the market with 73% of market share, but the only electric model produced is sold just with a lease formula and an official price list is not available.
Indonesian economy grew at a robust pace in Q4. Looser monetary policy should have supported domestic activity, while tourist arrivals were up notably in October and November, boding well for the service industry. In addition, the external sector appeared to strengthen somewhat, with the decline in exports slowing and imports continuing to fall sharply amid the government’s import substitution policies. However, retail sales were subdued in the period, while the manufacturing PMI remained below the 50-threshold signaling worsening operating conditions.
Growth is seen ticking up marginally this year, with fixed investment gaining momentum on government incentives and stronger infrastructure spending. However, this is set to be partly counterbalanced by a rebound in imports, which will weigh on the external sector. Lingering global trade tensions pose a downside risk.
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 the 2019 reached the new record of 810.433 units.
As far as the domestic market, it should grew up near 9 million in the 2025 and we do not believe this realistic.
Indeed, after having closed the first half of the 2019 with 3.25 million (+7.4%), the domestic new motorcycles market ended the 2019 with 6.53 million units, up 1.3% from the previous year.
The 99.9% of sales are with ICE models, while the start of the first local made electric scooters is concentrated in few models and counts less than 20.000 units. The Japanese giants which control the market have not yet released models, a part for the Honda PCX Electric, which is sold just with a lease formula reserved to companies, without an official price list.
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 and in the 2019 the market has changed the trend taking a positive path.
The market is dominated by Japanese brands, all producing both for local market and to export (mainly in ASEAN but even in other World’s regions, like South America).
In the 2019, Honda gained the 73% of market share followed by 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.