Motorcycle makers face slow sales, again

JAKARTA. Local motorcycle producers are bracing for a prolonged downturn in 2013, as commodity prices continue to languish overseas and the central bank weighs new rules to avert a credit bubble.

The Indonesian Motorcycle Industry Association (AISI) estimated that total sales for two-wheel vehicles would shrink by around 11 percent to 6.3 million this year.

Sales also dropped in 2012, when demand was eroded by a Bank Indonesia (BI) rule on loan-to-value (LTV) ratios and by drops in consumer purchasing power, which was reduced as commodity prices dropped.

BI’s rule raised down payments for motorcycle purchases from 10 to 25 percent, starting on June 15 last year.

AISI chairman Gunadi Sindhuwinata said on Tuesday that there was a bleak outlook for sales for two-wheel vehicles in 2013, as BI would introduce more rules on motorcycle down payments.

The central bank is set to expand in April the down payment regulation to include sharia financing, which has become an alternative source of motorcycle credit since the LTV rule was introduced in June.

“The outlook is gloomy. Apart from the expansion of the higher down payment requirement to sharia banking, pressure will also come from a downward trend in commodity prices,” Gunadi said.

While demand would remain high, people’s purchasing power would decrease, according to Gunadi

Sales of motorcycles in Indonesia, the world’s largest producer of several key commodities, such as palm oil, coal and rubber, have been affected by declining commodity prices due to the prolonged global slowdown.

The commodity boom in recent years has driven demand for motorcycles, particularly in outside Java, where motorcycles are popular among plantation and mining workers.

Overall motorcycle sales, an indicator of consumption in Southeast Asia’s largest economy, reached 7.06 million last year, down 11.83 percent from 2011, the highest level in recent years. The drops affected key firms such as Astra Honda Motor, Yamaha Indonesia Motor Manufacturing and Suzuki Motor Indonesia.

Market leader Honda, for instance, sold 4.09 million motorcycles last year, down 4.33 percent from 2011, while runner-up Yamaha delivered 2.42 million, down 22.71 percent, and Suzuki distributed 418,940, down by 15.04 percent.

Agustinus Indraputra, Astra Honda Motor marketing planning and analysis division general manager, echoed Gunadi’s concerns, saying that the firm targeted selling 4.3 million motorcycles this year, which would be up 5.13 percent from last year, despite the situation.

Eko Prabowo, the promotions and communications general manager of Yamaha Indonesia Motor Manufacturing, said that Yamaha expected to sell 2.7 million units, which would be up 11.57 percent from 2012, mostly due to the expansion of the down payment rule to include sharia financing.

“The target is certainly not too high because we want to be realistic,” he said. Yamaha’s sales received a major blow from the higher down payment requirement in 2012, welling only 2.43 million motorcycles, much lower than its initial target of 3.15 million units. (Linda Yulisman/ The Jakarta Post)