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.