Motorbike sales to get fierce with new entrants

Motorbike sales to get fierce with new entrants

By Christiani Tumelap

JAKARTA (JP): The competition in the local two-wheel vehicle
market is expected to get fiercer with the entrance of dozens of
new brands from China, India, South Korea and Taiwan.

The entrance of the new brands could undermine the position of
locally produced Japanese brands such as Honda, Suzuki, Yamaha
and Kawasaki, which have dominated the country's motorcycle
market for decades.

At least five brands have been available in the market since
the government allowed the importation of completely built-up
motorbikes late last year.

According to the Ministry of Trade and Industry, more brands,
mostly from China, will enter the market in the next few months.

The new brands from China include Sanex, which will be
imported by PT Edico Megantra, Xiangjiang by PT Abadijaya
Adiluhur, Zong-shen by PT Soyukata, Jianshe by PT Semesta Baru,
Dayang by CV Jaya Abadi Makmur, Xin Dong Li by PT Maju Bersama
Surya Indah Motor and Yoriko by PT Yoriko Motor Perkasa.

PT Edico said it would first import completely built-up Sanex
motorbikes, but would later assemble them locally at its factory
in Cikande, West Java.

The company is upbeat that the 100cc engine Sanex will beat
the existing Japanese motorbikes with its more attractive style
and cheaper price of less than Rp 10 million (US$1,250) per bike.

Another importer, PT Kancil, is importing Motorilenia
motorbikes from India's giant motorbike manufacturer Hero Group.

The company was optimistic that it would be able to capture 5
percent of the country's motorbike market this year with monthly
sales projected to reach 5,000.

The ministry said several other local firms had also reported
their plans to assemble imported motorbikes here, such as a joint
venture between Lippo Group and Taiwan-based Kwang Yang Motor
Co., that will assemble a jetmatic motorbike, Kymco, at their $51
million plant in Cikarang, West Java; and a joint venture by
Bosowa Group and South Korean motorcycle manufacturer Hyongsung
Motors & Machinery Inc. that will assemble imported Hyongsung
motorbikes at their factory in Karawang, West Java.

The ministry estimated imported motorbikes of different brands
would reach at least 14,000 this year.

However, automotive analysts and old players in the market
said the newly imported motorbikes would have to travel a long
and bumpy road before they could really beat the locally
assembled motorbikes.

Automotive analyst Suhari Sargo said the imported motorbikes
need to prove their true quality and other value-added services
before they could push aside the country's locally assembled
motorbikes.

"The imported motorbikes will be able to capture less than 10
percent of the total motorbike market this year," he told The
Jakarta Post over the week end.

He said the locally assembled motorbikes had won customers'
trust on product quality, after sales services and availability
of spare parts, through their long period of local existence.

Suhari said one of the significant ways a new importer of
motorbikes could beat locally assembled products was to sell
their bikes at a much lower price.

He estimated the number of imported motorbikes would reach at
least 45,000 this year but that only between 20,000 and 30,000
would be sold.

The expected influx of imported motorbikes -- most of which
are expected to be priced at less than Rp 10 million each as
against a range between Rp 16 million and Rp 20 million of the
locally produced Japanese brands, has so far failed to spook
dealers of locally assembled motorbikes.

Agung Rai, manager of Suzuki's main dealer PT Indojakarta
Motor Gemilang, said dealers of locally assembled products were
upbeat that they could maintain their dominance in the local two-
wheel vehicle market.

"We have been in the market for years. People know and trust
our quality and over-all services. It will take a couple of years
for the newcomers to be able to really compete head to head with
us," he told the Post.

He acknowledged, however, that in the short term, the imported
motorbikes could possibly beat locally assembled products,
especially in outlying markets, such as rural towns.

"Customers in such markets can be easily attracted to imported
goods, especially if they are cheaper. They might rush to get
them. But, if they find later that the imported products are not
what they expected, they will immediately return to us," he said.

Agung admitted that the sales of certain types of locally
assembled motorbikes in some outlying markets had decreased
recently due to the massive entrance of the newly imported bikes.

"But, the new products' sales hype usually only lasts for
about three months. After that, our sales will return to the
normal level," he added.

The Indonesian Association of Motorcycle Assemblers predicted
recently the country's motorbike sales would grow rapidly this
year to exceed 800,000 this year, reflecting a 39 percent
increase from last year sales of 487,759, as a result of the
entrance of new imported motorbikes.

The association's data shows, however, that the existing
Japanese licensed assembled Honda motorbikes is maintaining its
top position for the first three months sales this year with
estimated total sales of 93,477 bikes, about 56 percent of the
market share, followed by Yamaha with 35,858, Suzuki, 31,238,
Kawasaki, 4,869, and Vespa, 1,003.

Indonesia's motorcycle market, the third largest after China
and India, suffered a major setback in 1998 with the impact of
the country's worst ever economic crisis.

Total motorcycle sales in the domestic market, which reached
1.88 million in 1997, dropped to 430,948 in 1998 due to the
crisis. But, the industry showed signs of recovery last year with
total sales rising to 487,759.