May 11, 2007

2 Road to the Indonesian Two Wheeler Industry

An insight into the Indonesian Two Wheeler Industry and the reason why TVS and Bajaj are so bullish on it..

The Prediction…

"Special thanks to Aziz from Indonesia for providing me with the insights on the Indonesian Two Wheeler Industry"


Infact it is Aziz who was the guy responsible for the Digitally Modified Pictures of the Pulsar 220, published earlier on this blog. His digitally altered pictures can now be found circulating in many internet forums and blogs..!!

"Indian motorcycle manufacturers could be the next world players, and enter the Indonesian market. However, Indian domestic models are not yet appealing to buyers in other more developing markets such as Thailand, Malaysia, Philippines, Indonesia and Vietnam."

This is what Ridwan Gunawan, president of Indonesian Motorcycle Industries Association said on 18’th January 2002.

Indonesia on World Map


…Is proving to be true

5 years back when Indian Motorcycle manufacturers namely, Bajaj and TVS were starting to make a mark in India; the Indonesians saw it coming.

True to the prediction, Bajaj has already started its Indonesian operations in November 2006. The other Indian giant TVS Motor is also about to start its Indonesian innings very soon.





Why Indonesia..??

Indonesia is the third-largest two wheeler market in the world - after China and India - and is growing at a fast rate. Success in Indonesia also means easy access to other South East Asian markets, namely Thailand, Malaysia, Philippines and Vietnam.


Indonesian Two Wheeler Growth

Picture Courtesy Business World



The Indonesian Two Wheeler Market

Step Thru: Similar to how 100 C.C motorcycles dominate the two wheeler sales in India, the Indonesian motorcycle market is dominated by step-through motorcycles (like the Honda Cub; sold as the Hero Honda Street in India). Step Thru two wheelers account for almost 80 % of two-wheelers sold in Indonesia.

Sports Type/Motorcycles: Indonesians call the Motorcycle as the “Sports” type or Motor Sports two wheeler. The “Sports” type has a smaller market share in Indonesia.

Reason for the Indonesian inclination towards Step Thru two wheelers:

  • Cost: Step Thru two wheelers are cheap. A Chinese Step Thru can come in $200 and a fully loaded Japanese step Thru can cost around $600. Compared to that “Sports” or Motorcycles cost $1000 and above.


  • Maintenance: Indonesians feel Step Thru are easier to maintain than a motorcycle.


  • Mileage: Step Thru give better mileage than Motorcycles (that are sold in Indonesia)


  • Practicality: Step Thru are more practical in crowded Indonesian streets.


  • Universal Appeal: Step Thru can be used by all members of the family including the female members

Step Thru models are called “BEBEK” in Indonesia. The meaning of BEBEK in Indonesian is “DUCK”. It is called so because of its front panels of a Step Thru gives it the appearance like a duck..!!

Donald Duck as Donald Bebek in Indonesia


Two Wheeler Manufacturers Present in Indonesia
Honda,
Kawasaki,
Kymco,
Suzuki and
Yamaha

Two Wheeler Manufacturers in Indonesia

Picture Courtesy Business World



Together they account for 90 per cent of Indonesian two-wheeler sales.




The Chinese are there too..

The above manufacturers together, repulsed an earlier attack (1999-2002) by almost 80 Chinese companies that were exporting bikes to Indonesia. The Chinese came in strength after the Indonesian government opened the market, but did not set up a manufacturing base in Indonesia. They used surplus capacities back home and pushed CBUs (Completely Built Units) into Indonesia. Their pricing was at least 20 per cent cheaper than domestic manufacturers. In 2001, they notched up a 15 per cent market share, and tried every trick in the book to grab more imports and flooding the market.

But Indonesian consumers weren't happy with Chinese quality. The Chinese had also shied away from manufacturing investment. This affected critical areas like after-sales service and spares support. Today, the market share of the Chinese is down to about 10 per cent. The largest of them has a market share of less than two per cent.




Learning’s for Indian Manufacturers

The Indonesian market is very attractive. Indonesia has the largest population among the South East Asian countries. 1 out of every 10 Indonesian has a motorcycle. Indonesia's public transport is not too good either.
Moreover, availability of credit has improved considerably in the last few years. So there is ample room for growth. Following the not so satisfactory Chinese experience, the Indonesian customers would be wary of the quality of two wheelers from the Indian manufacturers. It’s up to TVS and Bajaj now to rise to the occasion and build a brand for their products in Indonesia.






Sources:

BusinessWorld:- "The Road to Jakarta"
Aziz:- "The Bike Chronicles of India" visitor from Indonesia and my friend




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Disclaimer:

This is to remind that the Views or Opinions in the blog are entirely mine unless explicitly stated. The Views and Opinions published in this blog should in no way be related to any other person or organization associated -- directly or indirectly -- with me.




2 Comments:

Gunawan MS said...

Quite a few things have changed since this article was published. The 2 wheelers market is now not really dominated by an underbone cub bike (called a step thru by Payeng), but has been encroached by the underbone matic moped variants in a rapidly increasing rate (i think latest number will show parity beetween these segments). The sport bike is increasing in market share, though not in a drastic manner, but it's gaining strength, thanx somewhat to the increasing income and variable choices in the market.

I think Indian manufacturers (TVS & Bajaj) should leverage their knowledge & capability in moped manufacturing to capture this trend, which i think going widespread in other southeast asian countries as well. Step thru aka bebek bike is getting obsolete, for its jack of all trades nature, good at everything, best at none. You want comfort, easy, hassle free ride in crowded, congested urban ride, go with matic moped. You want performance, prestige, and outstanding rural ride for long range touring, sport bike is the right answer.

Regards,
Gunawan

Anonymous said...

Quite informative............is it possible to chat with Aziz for some more advance level of 2 wheeler accesories market in Indonasia and Vietnam....my email id is
rajeshnayer@yahoo.com

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