CONSOLIDATED MARKET INTELLIGENCE MOTORCYCLE INDUSTRY DEVELOPMENT IN INDONESIA

Preliminary

Motorcycle industry as the manufacturing industry can not be separated from the impact of global economic recession. Motorcycle industry is still experiencing fairly rapid growth until the third quarter of 2008. The pusher is a demand to increase as people's purchasing power that fueled the price of agricultural commodities in the year 2008 is quite nice.

For the people of Indonesia, the motorcycle is still a tool that is cheap and easy transportation, both in urban and rural areas. This is not independent of the mass transportation system not so developed.

These conditions make investment in increasing capacity at existing plants or building new plants, including the new player is still going on until the year 2008.

However, entering the fourth quarter of 2008, motorcycle sales steadily declining due to weakening demand. However, overall the year 2008 the motorcycle industry in Indonesia grew quite high, reaching 33.24 percent. Prospects in the year 2009 is expected to be as good as the previous year.

Even so, there are still factors that will be the driving force for this industry in the coming year ie deflation after a decline in fuel prices in late 2008 and early 2009 and the loosening of monetary policy by monetary authority through a reduction in SBI rates.

Meanwhile, the level of competition will remain high because the market is narrow. The competition includes price, model and engine capacity. Competition is especially the case between Honda and the Yamaha is a leader of the motorcycle market.

Production Capacity

Motorcycle industries in the homeland to the end of 2008 still showed a good development. Visible from the sales continued to increase since the year 2006.

Industry is still growing making capacity also increased with the entry of new players like TVS and Bajaj Auto of India. Some old players such as Honda and Yamaha also plans to add more capacity.

Although since the end of the year 2008 the world economy into a recession, but some investment plans for the addition of this capacity is still running. Bajaj Auto will realize additional capacity at its factory in Cikarang, with investments worth U.S. $ 60 million in mid 2009.

These investments are used to improve the fabrication process of the Semi-Knock Down (SKD) or semi-intact components imported into Completely Knock-Down (CKD) or assembly of components decompose.

Meanwhile, Yamaha has realized additional production capacity in November 2008 at its plant in Karawang West Java from the original capacity of 1.8 million units of motorcycles per year to 2.4 million units of motorcycles per year and, according to Yamaha's plans will continue to enhance its capacity to reach 3 million units per year in 2010.

Additional capacity of 600 thousand units is part of an investment worth U.S. $ 88 million, which included the addition of factory buildings around U.S. $ 39 million, building a training center for U.S. $ 4 million, as well as facilities and equipment reached U.S. $ 45 million. Penamaban capacity is still being done because it is a long-term plan to strengthen Yamaha including export markets.

Yamaha also increase the capacity of the central spare parts warehouse located in Cibitung, West Java with an investment of about U.S. $ 5 million. The expansion increased the capacity of the spare parts warehouse around 1000 units to 26 000 units from 25,000 units the previous.
Honda is scheduled to add capacity in the year 2009 which amounted to 10 percent of original capacity. However, this plan will likely be adjusted with the global economy is in recession.

Some investments to add capacity and the establishment of this new factory to increase capacity so porduksi motorcycle industry in 2008 reached 7.86 million units per year.

Increased capacity to respond to this is that growing demand is high enough in the year 2008 and reduce the length of time of booking. The high demand makes the prospective buyers were forced to order a term of between one to three months for the latest products prouduk motorcycle.

Global recession which is already foreseen occurred since early 2008 did not affect the demand for motorcycles in the country that year because of people's purchasing power is still quite good.

This situation makes some old players to add production capacity in addition to inviting the entry of new players. But the economic recession continues to get worse is likely to make capacity expansion plans by the player in this industry will be captured this year.

Since 2006 motorcycle production volume is constantly increasing. In the year 2007 production volume reached 4.7 million units or grew 5.6 percent from a year earlier.

Meanwhile, in the year 2008 the growth of motorcycle production volume increased high enough that 33.3 per cent with volume of 6.27 million units. The production increase follows the demand for the year grow by the same range of numbers.

In the year 2009, production is expected to remain or even corrected considering that there are drivers like deflation character only reduce the pressure but fundamentally will not encourage growth.

Table - Volume production of motorcycles in Indonesia, a member of AISI 2004 - 2008

Year Production Volume (units) Growth (%)
2004 3.897.250
2005 5.113.487 31.21
2006 4.458.886 -12.80
2007 4.706.812 5.56
2008 * 33.33 6.2754 million
Note: *) Estimated
Source: Data Consult

Honda's largest producer

Honda's largest producer

Honda as a market leader in the motorcycle industry in the country by the year 2008 is still the largest producer. Honda's production in 2007 reached 2.14 million units. With this production level Honda controlling approximately 45.42 percent of the total production of motorcycles in the ground water.

Production of Honda for the year 2008 increased substantially to 2.83 million motorcycles, or 32.6 percent. This production increase was to respond to market demand in that year to grow about 33 percent. Despite the increase, but its share slightly decreased to 45.19 per cent of total national motorcycle production

Other manufacturers are fairly large quantity of production is Yamaha. In 2007 production reached 1.67 million units of motorcycles or reaching 35.6 percent of total motorcycle production in Indonesia.

This production level increased to 2.52 million motorcycles in 2008 or increased by 50, 54 per cent. The increase was boosted share of production Yamaha motorcycle to 40.18 percent.

Yamaha in recent years as manufacturers continue to close to Honda's largest motorcycle. Yamaha production increase is supported by capacity expansions since 2006. Yamaha supported by increased production of market demand continued to increase since the year 2006.

In the year 2009 production is expected to stagnate or even decline because of weaker domestic market. Export markets can be an alternative also expected to weaken.

Manufacturers such as Yamaha in the long term will increase the export of motorcycle makes. His investment in second plant in Karawang, one of which is intended to produce motorcycles for export.

Yamaha Factory in Indonesia is the largest in the world who each contribute to the supply tahunmemberi Yamaha motorcycles as much as 40 percent.

Other manufacturers such as Suzuki, even though production levels increased, but its share declined due to growing market more absorbed by the two main manufacturers namely Honda and Yamaha.

Sales in 2008 through six million units

Sales of motorcycles in the ground water in the two years since the distress in the year 2006 continued to increase. In 2007 sales reached 4.47 million units, or a growth of 5.44 percent.

Improvement again happened in the year 2008 namely equal to 33.24 percent to 6.28 million units for motorcycles. This increase occurred due to improved purchasing power.

Indonesia's economy in recent years driven by consumer spending makes consumer goods such as motorcycles increased demand.

Honda still leading

In recent years continue to follow Honda Yamaha motorcycles as the most widely sold. Within a few months in the year 2007 has exceeded even the Yamaha Honda in sales figures. But cumulatively within a year of Honda is still in charge.

In the year 2007 Honda motorcycle sales reached 2.14 million units. Honda's market share from the year reached 45.45 percent. Meanwhile Yamaha in 2007 sales reached 1.85 million units with a market share of 39.32 percent.

In the year 2008, both Honda and Yamaha each managed to increase sales. Honda could sell as many as 2.88 million units, an increase of 34.3 percent. With sales volume of this market share reached 45.81 percent from Honda.

Yamaha's sales meanwhile grew by 36.1 percent to 2.52 million units of motorcycles. Yamaha has a market share of 40.17 percent. Both these manufacturers continue to compete in the sale of general Honda though still superior.

Cumulatively, in the year 2008 Honda sales reached 2,877,408 units higher than the Yamaha which amounted to 2,522,866 units. However, in a particular month to pass Honda Yamaha motorcycle sales amount as in December 2008 where Honda's sales reached 173 849 units less than the Yamaha which reached 194 423 units.

In January 2009 sales overtake Honda Yamaha again. Volume sales of Honda motorcycles as much as 179 685 units, while sales volume reached 162 656 units of Yamaha.

Automatic scooter segment increased

Viewed from the types of motorcycles sold in the year 2007 until 2008, showed that type of automatic scooter bigger market share. Sport type motorcycles also increased its market share in those years.

In the year 2007 types of motorcycle sales to reach 872 066 units of automatic scooters or achieve market share of 18.5 percent of total motorcycle sales.

In the year 2008 this kind of motorcycle sales rose high enough return to 1,613,661 units so that about 25.7 percent market share. Automatic scooter sales lots donated by Yamaha, followed by Honda, Suzuki and Kymco.

Type of automatic scooter in great demand because of practical and fashionable. At the time of the motorcycle industry in 2006 due to depressed prices BB | M at the end of 2005, the type of automatic scooter capable of increasing its market share.

Sport type motorcycle sales in 2007 reached 377 107 units or market share reached 8 percent. In the year 2008, its market share rose to 8.5 percent or the sales volume amounted to 533 868 units.

Meanwhile, the type of duck that has been decreasing market share of its market share. In 2007 sales reached 3,464,705 units of this type with a market share of 73.5 percent. In the year 2008 motorcycle sales increased to 4,132,756 units duck, but its market share fell to 65.8 percent.
Decline in market share of ducks is because the image of the automatic scooter and motorcycle sport growing stronger. Although initially created to fill the segment of women riders, but now seen not identical with the feminine image that can be accepted by the male rider segments.

Part of the image of a duck that is practical motorcycle has now been owned by the automatic scooter with even higher levels. With prices that compete with the type of duck make a choice of automatic scooters.

Meanwhile, motorcycle still represent the type of sport is tough and masculine image. Consumers are not a sports bike but when I have to consider the practicality of switching to the practical motorcycle is now tended to choose automatic scooter than other types of duck because it is not practical and not attached to the feminine image.

Increasingly harsh competition

Global economic conditions that a recession is expected to make the level of competition on the national motorcycle industry is increasing. Depressed market that will force the players to use various strategies to win the competition.

Some of the strategy pursued by, among others, is to launch a new model or, price adjustments, financing, advertising and promotion to build a community network.
Honda's aggressive new product out
One of the competitive strategies adopted in this industry is the range of products or models. Yamaha's success continues to increase its sales even in a particular month overtake the Honda which has been the market leader is due to Yamaha's pretty aggressive release of new models since around the year 2006 in three types of motorcycles.

Honda responded with various strategies including by issuing many new models. In the year 2008 just released four new models Honda namely CS-1, Beat, New Tiger, and Blade.

Meanwhile, back at the January 2009 Honda issued a new series to replace the Absolute Revo Revo 110. Three of these five models namely CS-1, Beat, and Blade is an entirely new model rather than modify an existing model.
CS-1 is a new kind which are not included in the classification of a duck, sport, or, automatic scooter. The form of this motorcycle is a combination between a motorcycle sports and ducks.

Another player who is also active in issuing the new model is Kawasaki. In 2008 Kawasaki released three models namely motorcycle motor sport Ninja 250 R, trail KLX 250 S, and duck Athlete 125. Yamaha himself in the year 2008 just released Vega ZR duck products which are only new series from the previous Vega

Leave a 100 cc Honda engine

Engine capacity is one of the industry standard for producers who became a strategy to enter the market. Engine capacity is closely related to how manufacturers are positioning their products into a versatile product, or a versatile semi lifestyle because the engine capacity to determine the consumption of fuel produced.

The smaller capacity engine in its class by the manufacturer which is labeled with the image of efficiency. Meanwhile, the larger the engine capacity in its class is labeled with the image of strength is more practical although these differences can not be fully realized because of reasons of traffic.

Standard engine capacity continues to grow according to the types of motorcycles. For duck motorcycle capacity is divided into four classes, namely the capacity of 100 cc, 110 cc capacity, engine capacity 125 cc to 135 cc and 150 cc.

Until December 2008, only Honda is still producing motorcycles with engine capacity 100 cc of the Honda Supra Fit. This product is positioned as an efficient vehicle pacing (Econo compact commuter). With this product, thrifty image Honda maintained.

Meanwhile, competitors like Yamaha did not pursue the image as thrifty motorcycles, motorbikes but more powerful, responsive and fast so chooses to make a duck 110 cc motorcycle as a motorcycle. The same was done by Suzuki and Kawasaki.

Entering the year 2009, Honda stopped production of motorcycles with engine capacity of 100 cc and 110 cc engines replaced it with. This strategy shows the Honda probably still will carry the image as a motorcycle but no longer economical approach to engine capacity.

For sport type motorcycle engine capacity mainly divided into three classes namely 150 cc, 200 cc and 250 cc. motorcycles are generally produced using a standard capacity of 150 cc, 200 cc and 250 cc. In this kind of sports producers do not make a distinction between the capacity of the machine in a class as a model for a more prominent factor.

Even so there are producers as a strategy to create a separate class that is Bajaj Auto that produce motorcycles with engine capacity 180 cc namely Bajaj Pulsar DTSi with product that is later replaced with the Pulsar DTSi 200 cc.

Meanwhile, motorcycles scooters automatic type standard capacity is 110 cc and 125 cc. Despite the general standard of the same engine capacity, but there is little difference in the way the Yamaha which makes automatic scooter with a capacity of 113.7 cc or approximately 115 cc.

Meanwhile, Honda manufacture automatic scooter with a capacity of 110 cc, while the Suzuki with a capacity of 125 cc.

Honda adjust the lowest price on a new model motorcycle duck

Price to be one strategy to compete in the motorcycle industry in Indonesia. In this type of motorcycle is the biggest market share of ducks, the difference in prices until the year 2008 lies in the lowest and highest prices.

Honda is the lowest price Rp.10.600.000, - while the Yamaha and Kawasaki rivals are, respectively Rp.11.500.000, - or equal to 8.5 percent.

Meanwhile, for the highest price reached Rp.16.100.000 Honda, - while the Yamaha and Kawasaki Rp.15.050.000 respectively, - and Rp.14.800.000, - or equal to 7 percent and 8.8 percent.

Honda looks to strengthen the lower consumer segment with the lowest prices. This is consistent with Honda's strategy as an economical motorbike manufacturers.

With the price of the most wide range and number of products in this class that is the most reach six models, Honda also looks like to take a wider market.

While Yamaha and Kawasaki do not use the lower price strategy to compete sebaga. Price range of Yamaha and Kawasaki products are also not too wide so it looks like they are more focused on consumers that is slightly above the consumer segment of the bottom layer. Fewer number of models that their respective models and the Kawasaki Yamaha 5 4 model also reflects the pricing strategy adopted.

In 2009, Honda will raise the lowest price on the same level ie to Rp. 11.6 million, - is taken by stopping the production of the Supra Fit X and Revo are 100 cc engine with the Absolute which engined 110 cc Revo.

For this type of motor sport ranges in price between Honda and Yamaha did not differ significantly, while the Kawasaki range of substantial price. Honda's price range is between Rp. 17.6 million, - to Rp. 20.9 million - while Yamaha between Rp. 16,700,000, - till Rp. 19.485 million, -.

Both players are indeed a market leader in sports motorcycles which target key segments. Judging from the number of products, they also did not differ significantly. Until the year 2008 still produces three models of Yamaha RX King ie, Scorpio Z, and V-Ixion, while the Honda with two models of the Mega Pro and Tiger. However, starting in 2009 Yamaha RX King will stop production of engine technology that still uses two steps.

Meanwhile, Kawasaki's since the beginning of a player that target specific segments by applying a more expensive price. Price range Kawasaki motorcycle sport is Rp. 20.8 million, - to Rp. 54.9 million, -. Kawasaki has the image as a stylish motorcycle manufacturers that represent the lifestyle so the price is much higher.

Yamaha to build a stronger image

One of the strategies used in competition is the imagery. Honda motorcycle imaged himself as efficient in fuel consumption and durability, while the Yamaha as a motorcycle that is responsive and powerful.

Yamaha managed to take advantage of the changes that occur in the motorcycle industry where more and more young people who have motorcycles.

Yamaha motorcycle imaged himself as a young and sporty designs as well as fast. Yamaha also uses a very strong endorser its image with young children and the speed that is Valentino Rossi. This image encouraged by commercial advertising, direct broadcast sponsorship of motor racing, building a community of riders, as well as related activities such as bringing his endorser to Indonesia.

Honda is also doing much the same thing but not segencar Yamaha. Honda does not do sponsorship in motor racing is quite popular as the Yamaha.

Other players such as Suzuki and Kawasaki's efforts to raise awareness is not an area of Yamaha and Honda.

Conclusion

National motorcycle industry is an industry that still continue to experience growth. This growth was driven by the needs of the community will transport cheap and flexible.

This community needs will continue to exist given the lack of an integrated mass transportation system especially motorcycle ownership ratio in Indonesia is still relatively low in the ASEAN region in the future so that the potential is still very good.

Good potential has encouraged the growth of production capacity. In 2008 motorcycle production capacity reached 8.46 million units per year. Production also continues to increase as demand continues to grow. Production levels in 2008 reached 6.27 million units.

Honda is still the largest producer in 2008 with a production volume amounted to 2.83 million units followed by Yamaha with 2.52 million units. Both these players together to master the production share of 95 percent.

Meanwhile, in the year 2008, sales of motorcycles reached more than 6 million units which was a record sales of motorcycles in the ground water. The sales growth is also growing quite high, amounting to 33.2 percent.

The growth of these industries are affected by global recession, so that in the year 2009 growth expected to be detained as a result of pressure on demand. This demand is estimated to decline occurs more frequently in the region producing agricultural commodities.

People's purchasing power in the region producing agricultural commodities such as palm oil and coffee commodity prices fall due to large enough compared to when it reached its peak in 2008. Decline in commodity prices can not be offset by increased export volumes due to weaker global demand.

Meanwhile, demand in urban areas tend to be more resistant than weaker though still declining trend because their incomes are not only derived from the manufacturing sector also weakened.

Income urban communities in the service sector, some industry sectors such as food, informal sector, and government sectors is not too much affected because of other ongoing activities, the general inflation rate is also controlled.

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