Domestic and foreign sales are expected to increase by 40 percent by 2023.
Just like Japan's automotive manufacturers, Japanese motorcycle manufacturers in Indonesia are increasing their export output. The target market is, above all, the ASEAN region.
Indonesia is the third-largest market for motorcycles behind China and India. The growth path is steep: According to the National Bureau of Statistics (BPS), almost 119 million motorcycles were registered in 2018. That's a doubling in just about eight years. Thus, statistically speaking, more than every second roadworthy Indonesian are already in possession of one. Motorcycles are the main means of transport for the poorer classes of Indonesian society. In addition, they are also used by many well-off urbanites to get through traffic jams.
A new homemade motorcycle usually costs between US$1,000 (roughly 14 million rupiahs) and $3,000. A passable used model is already available for as low as $200. This is what most Indonesians can afford in the meantime. Anyone who earns even the minimum wage in Jakarta, for example, already has a monthly income of $300.
For 2019, the Association of the Indonesian motorcycle industry (AISI) expects 6.7 million units to be sold (for both the home market plus export). In the year 2023, already 9.4 million pieces are to be sold. That would be an increase of forty percent in just four years. In recent years, however, already saturation tendencies are becoming apparent: sales fell between 2011 and 2017 from 8.0 million to 5.9 million units.
Over the past decade, there has been a technological development in the Indonesian motorcycle market. Traditionally dominated by the semi-automatic, so-called Cub-types without footrest, the most comfortable and easier-to-use automatic scooters are predominantly more in demand nowadays. They accounted for about 80% of all sales in 2018. Just under ten percent are Cub types and sports motorcycles.
Indonesia among the top ten exporters
Because the domestic market can be adequately served with the existing production capacities, exporting has become more and more important for producers. According to AISI, just under 10% of the production volume will be exported in 2019. The association expects that 620,000 to 640,000 of Completely Built-Up CBU units will have been exported for the full year. The main buyers are the other ASEAN countries.
Sectoral exports (according to tariff heading SITC 7851) have grown by leaps and bounds in recent years, increasing nine-fold to US $ 1.1 billion from between 2013 and 2018, according to UN Comtrade. Indonesia was one of the ten largest motorcycle exporters in 2018, only a short distance away from fifth-placed Italy. About half of the exports went to the Philippines. Vietnam and Thailand accounted for another 30% of the deliveries.
In terms of value, Indonesia's motorcycle imports amounted to only $85 million in 2018. The figures for German deliveries are inconsistent: According to Destatis, there are no industry exports to Indonesia of any significant extent. However, according to the Indonesian import statistics, Germany was the third largest industry supplier in 2018, with imports worth $15 million. These imports were, therefore, large-engined models with more than 800 cubic meters of displacement.
Foreign brands mainly serve the luxury segment. These include BMW or Ducati and Vespa (both Italy), Harley Davidson (USA) and Royal Enfield (United Kingdom / India), but also the locally produced premium models of Honda and Yamaha.
Honda and Yamaha make duopoly
The Indonesian motorcycle market, like the automotive market, is dominated by Japanese brands. There is virtually a duopoly: Honda accounts for three quarters of sales, while just under a quarter is served by Yamaha. Suzuki and Kawasaki occupy some small niches, but their market share has shrunk significantly in recent years.
The annual production capacity of the five AISI members (Honda engine, Yamaha engine manufacturing, Suzuki Indomobil engine, Kawasaki engine, and TVS engine) is 11.8 million units. About eighty percent of this is attributable to Honda and Suzuki. Of the non-AISI members – mainly manufacturers from China, India, Taiwan, and South Korea – the figure is only 634,000.
Market leader Honda has five production sites, all located in and around Jakarta. The company claims to have just under 1,000 suppliers, 1,800 authorized dealers nationwide, 3,600 authorized repair shops and 7,700 stores selling replacement parts. Yamaha has two manufacturing plants, four parts factories and a sales network with 4,300 locations.
GTAI is the foreign trade and inward investment agency of the Federal Republic of Germany. The organization advises foreign companies looking to expand their business activities in the German market. It provides information on foreign trade to German companies that seek to enter into foreign markets.