Easy credit help motorcycle sales maintain growth
The Jakarta Post, Jakarta
The moment he lost his job early this year, 32-year-old Ade was certain about what he would do next -- he bought a motorcycle on credit and became an ojek (motorcycle taxi) driver.
"Motorcycles are affordable nowadays and everyone can buy them on installment," he said.
With daily earnings of Rp 50,000 (US$5.25), Ade has been able to easily meet the Rp 500,000 monthly installments.
"Basically, the motorcycle pays for itself," he said.
Easier procedures for purchasing motorcycle on credit, thanks to the presence of financing firms and cheaper motorcycle prices -- between Rp 8 million and 12 million -- have prompted consumers like Ade to buy the vehicles.
High demand has boosted motorcycle sales in the country that has enjoyed average annual growth of 33 percent over the past three years, similar to the level between 1995 and 1997 before the financial crisis hit Indonesia.
Last year's growth of 38 percent, representing a total of 3.9 million motorcycles, caught the motorcycle industry by surprise, said the Indonesian Motorcycle Industry Association (AISI) chairman Ridwan Gunawan.
The association -- comprising seven motorcycle manufacturers: Honda, Kanzen, Kawasaki, Kymco, Piaggeo, Suzuki and Yamaha -- said AISI had previously projected that sales in 2004 would only increase by 15 percent from 2.8 million in 2003.
"We had thought that the general elections would dampen sales," Ridwan said. "But we were wrong ... and we're glad we were."
He estimated that this year's sales would remain robust. So far, motorcycle sales have recorded a 33.8 percent rise in the first five months compared to the corresponding period last year. The increase was higher than the association's growth target of 20 percent, set at the beginning of the year.
With 90 percent share in the domestic market, AISI reported a production level of 431,272 motorcycles in May alone. The figure was 8.4 percent higher than April's 397,825.
However, the association will keep its "conservative estimate" of 4.6 million motorcycles in sales for the remainder of the year.
"Although all signs have indicated that we will easily surpass the target, we have not yet considered revising the target," Ridwan said, adding that motorcycle sales could reach five million this year should there be no unexpected economic shocks.
Indonesia is currently the third largest producer of motorcycles in the world, after China and India.
Ridwan said domestic motorcycle sales would continue to expand due to an improving economy, easy access to consumer credit and lack of convenient public transportation facilities.
He added that Indonesia's low penetration rate of motorcycles, where there is one motorcycle for every 10 people, left much room for growth. He said the ideal ownership level would be 25 percent, a level already reached in Malaysia and Thailand.
According to Ridwan, the country's inadequate public transport facilities have also stimulated demand for vehicles and since cars were still too expensive for the majority of Indonesians, motorcycles became the preferred choice.
Jakarta's governor Sutiyoso is considering making special lanes for motorcycles in response to the skyrocketing number of motorcycles roaming the city's streets.
But not everybody is happy with the presence of more motorcycles.
Fifty-four-year-old Solichin, who lives in Cemara Jaya, Bekasi regency, has experienced problems in coping with noise pollution during his siesta time from the modified exhaust pipes of local youngster's motorcycles.
"It's the sound of the motorcycles. They have 'invaded' the village!" he grumbled.
Village head Maryadi had another complaint.
"Many of the young people don't want to work in our village's lucrative fish farming sector anymore. They prefer to roam around on their motorbikes and become ojek drivers," he complained. (002)