Unreliable public transport, congested roads and a booming middle class make populous Indonesia one of the world’s largest motorcycle markets, and Japan’s Honda Motor wants a bigger slice of the pie.
With sales dropping in Europe and the US in recent years, Honda is eyeing a 60 percent stake in Indonesia’s market over the next decade, revving up the competition with its biggest rival, Yamaha.
“The potential demand for motorcycles in Indonesia is huge, and we’ll keep increasing production in line with consumers’ purchasing power,” Indonesia’s Astra Honda Motor communication head Kristanto said.
Honda and Yamaha are almost neck-and-neck. Honda served 46 percent of the market last year with 3.4 million sales units, and Yamaha served 45 percent at 3.3 million units. Together they supply almost 90 percent of demand.
Honda is hungry to capture 52 percent of the expected 8.2 million units this year, Kristanto said.
Yamaha is keeping cool despite Honda’s ambitions, with sales forecast to jump 6.3 percent this year.
“We are not going to worry. We’ll do our best and focus on our own strategy, especially giving customers the best service,” Yamaha Motor Kencana Indonesia spokesman Eko Prabowo said.
Automakers have been keen to tap the growing motorcycle market in Southeast Asia’s biggest economy, which has 240 million people. Indonesia’s motorcycle market is the world’s third-biggest after China and India.
National annual growth of private vehicle ownership has averaged 11 percent to 13 percent for the past decade, well above other developed countries, according to the University of Gadjah Mada.
“Daihatsu, Toyota, Nissan, they all want to have production plants here,” Indonesian Trade Minister Hatta Rajasa said.
However, Indonesia’s growing middle class is demanding far more motorcycles than cars — car sales last year topped 700,000, while motorcycle sales surpassed 7 million.
The average income for Indonesians has risen from US$650 in 2000 to about US$3,000 today, according to UN data.
“And with small loans available, a person can take home a motorcycle for only 500,000 rupiah [US$55] for the first installment,” Bahana Securities analyst Pandu Anugrah said.
As more remote parts of the Indonesian archipelago develop, motorcycles are more common outside the densely populated Java island, where around two-thirds of the population live.
“Because of a boom in commodities, such as palm oil and coal, sales on Borneo island are also growing rapidly,” Anugrah said. “Indonesians also have a strong sense of ownership. So they are proud if they can buy or lease motorcycles of their own.”
Indonesia is one of the fastest-growing economies in the world. Its output expansion is expected to top 6 percent for this year and next.
Despite rapid development, slow progress on transport infrastructure makes commuting in Jakarta unpleasant and inconvenient. Motorcycles and motorcycle taxis, known as ojek, are an affordable alternative to public buses and trains, which often run inconvenient routes and are overcrowded during peak hours.
Poor road planning and management, which has created a persistent traffic problem in Jakarta, costs the economy more than US$3 billion a year, according to the University of Indonesia, and is deterring foreign investment.
Traffic has become a problem for other major cities as well, including Yogyakarta and Surabaya, both on Java — but the country’s curse is Honda’s blessing.
“We’ll keep producing practical transportation as a solution for this problem for people of all levels in this country,” Kristanto said.
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