Industry Profie: Motorcycle Industry in Indonesia

MOTORCYCLE INDUSTRY IN INDONESIA

January 2009

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Competition sharper

The competition in the market is sharper with the decline in market size. Producers have to come up with effective strategies to win a significant share in the market such as by cutting prices, offering facility in payment, intensifying promotion and expanding distribution system.

Honda frequently launches new models.

Model is determinant in success in sales. Success in releasing new attractive models will mean success in sales. Yamaha has shown the significance of model in determining success in marketing. Yamaha released new models for three types of motorcycles since 2006.

Honda also was not to be left behind in releasing new models. In 2008, Honda produced motorcycles in four new models - CS-1, Beat, New Tiger, and Blade.

In January, 2009, Honda launched again a new series of Revo with Absolute Revo 110. The models of - CS-1, Beat, and Blade are entirely new not modification.

CS-1 is a new type not include din the categories of under bone, sport, or scooter. It is a combination of under bone motorcycle and sport motorcycle.

Kawasaki is also active in producing new models. . In 2008, Kawasaki produced three models of motorcycles the sport types of Ninja 250 R, trail KLX 250 S, and under bone type of Athlete 125.

Yamaha launched only new model of Vega ZR, which is a new series of Vega, which already entered the market earlier.

Honda no longer uses 100 cc engines

Engine capacity varies depending on the purpose of the owner in buying motorcycles - for private use or for commercial use as engine capacity will determine fuel consumption. Larger engine capacity will have larger fuel consumption and smaller engine capacity will be more fuel efficient. Producers, therefore, have to study the market demand for motorcycles by their uses.

The type of under bone motorcycles could be divided into four in capacity 100 cc, 110 cc, 125 cc to 135 cc, and 150 cc.

Until December 2008, only Honda produced motorcycles with engine capacity of 100 cc that is Honda Supra Fit. Honda Supra Fit is designed for commuter transport which is fuel efficient.

Yamaha give less importance to fuel efficiency but it develops the image of being strong and fast. Therefore it chooses to produce under bone motorcycles with engine capacity of 110 cc. Similar tendency is shown by Suzuki and Kawasaki.

In 2009, however, Honda stopped producing motorcycles with engine capacity of 100 cc. Instead it produced more ones with engine capacity of 110 cc.

Sport motorcycles are divided into three categories in engine capacity 150 cc, 200 cc, and 250 cc. Model is a determinant factor for the success in marketing of sport motorcycles.

There is a producer - Bajaj Auto - coming up with a special class as a marketing strategy. Bajaj Auto produces motorcycles with an engine capacity of 180 cc known as Pulsar DTSI later changed with Pulsar DTSI 200 cc.

The standard capacity for automatic scooters is 110 cc and 125 cc. Yamaha produces automatic scooters with engine capacity of 113.7 cc, Honda 110 cc, and Suzuki 125 cc.

Lowest and Higher Prices of Under Bone Motorcycles

The lowest price of Honda product is Rp10.6 million and that of Yamaha and Kawasaki is Rp11.5 million per unit.

The highest price for a Honda product is Rp16.1 million; Yamaha Rp.15.05 million and Kawasaki Rp.14.8 million.

Honda looks set to maintain its marketing strategy to win the competition in price by producing various types in six models with wide price range. With that strategy Honda has managed to grab wider market segment.

Yamaha and Kawasaki attach less importance on prices to win competition. They do not produce too many in types and models. They are more interested in competing in market slightly above the lowest segment of the market.

Yamaha has only 5 models and Kawasaki 4 models.

In 2009, Honda plans to raise its lowest price level to Rp11.6 million by stopping production of Supra Fit X and Revo with engine capacity of 100 cc.

The prices of sport motorcycles are not different much between Honda and Yamaha. The prices of Honda sport motorcycles range from Rp17.6 million to Rp20.9 million each. The prices of those of Yamaha range from Rp 16.7 million to Rp19, 485,000.

The two are the leaders in the sport motorcycle market. In 2008, Yamaha produced three models RX King, Scorpio Z, and V-Ixion. Meanwhile, Honda came up with two models - Mega Pro and Tiger. However, in 2009, Yamaha plans to stop production of RX King, which is still produced with two step engine technology.

Kawasaki has from the beginning eyed special segment putting up higher price tags ranging from Rp20.8 million to Rp54.9 million per unit. Kawasaki has developed the image as producer of stylish motorcycles with expensive prices.

Yamaha stronger in developing image

Image or reputation is important in marketing strategy. Honda develops an image of being efficient in fuel and durable. On the contrary Yamaha is known for its power and speed and being more sporty. Yamaha, therefore, has won more buyers among young motorists.

Suzuki and Kawasaki are less aggressive as Yamaha and Honda in developing image.

Conclusion

The country's motorcycle industry has continued to grow as motorcycles still serve the cheapest and efficient means of transport for most of the people in urban and rural areas. In addition the ratio of motorcycles to the population in the country is still low compared with other countries in this region.

The country, therefore, still provides a potential market for motorcycles encouraging producers to increase their production capacity. In 2008, the country's production capacity for motorcycles reached 8.46 million units per year. Meanwhile, production has continued to scale up boosted by the growing demand to reach 6.27 million units in 2008.

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