Hasyim Widhiarto and Wahyoe Boediwardhana, Jakarta/Surabaya – After working as a Go-Jek driver for several months, 38-year-old Irwan recently ditched his old motorcycle for a new Honda Vario with an Rp 18 million (US$1,342) price tag.
The West Jakarta resident, who was jobless before joining the popular application-based ojek (motorcycle taxi) service late last year, said he became interested in a new ride when he learned he could afford such a product, which he bought under a 26-month installment scheme.
"This new motorbike can help me move faster. It also makes my passengers feel more comfortable," he said, adding that he allocated Rp 900,000 monthly to pay the installments for his new motorcycle.
A much cheaper option compared to cars, motorcycles are a popular means of transportation in Indonesia, a home to over 250 million people.
For millions of households, a motorcycle is also deemed a crucial investment, as it can transport laborers to their places of work, farmers to agricultural land, students to schools and vendors to traditional markets, at minimal cost. For many people, like Irwan, a motorcycle can also become a direct source of income as they can offer ojek services.
The popularity of motorcycles has also made them an important indicator to gauge the country's economic state. Annual sales of motorcycles, for example, took a nosedive to below 1 million vehicles for three years after the 1997-1998 Asian financial crisis. The global financial crisis in 2008, meanwhile, sent motorcycle sales down by 6 percent to 5.8 million, before making a quick recovery the following year.
The local motorcycle industry struggled once again over the past year amid the global economic slowdown, as annual sales declined by almost 20 percent last year – the biggest drop in 15 years – according to data from the Indonesian Motorcycle Industry Association (AISI).
Industry players have also shared their pessimism about the industry's outlook as the government recently revised down this year's economic growth target to 5.1 percent from an initial 5.3 percent, after acknowledging that private consumption, which accounts for about 50 percent of the country's gross domestic product (GDP), would remain low as a result of weakened purchasing power.
This year, AISI members set a sales target of 6.5 million motorcycles, a minor increase from the 6.4 million sold last year.
Although the industry had managed to fulfil almost 40 percent of the target by May, AISI executive Sigit Kumala said manufacturers and dealerships could not do much to push cautious customers into buying new motorcycles, even with installment schemes, a common payment option in Indonesia's automotive market.
"During difficult economic conditions like today, giving discounts is clearly not an option. The best thing we can do is giving small merchandise to buyers," he told The Jakarta Post on Thursday.
With many people holding off on spending for secondary items, including motor vehicles, the local motorcycle industry now relies heavily on limited buyer segments, such as drivers of app-based services like Go-Jek, Grab and Uber, which have been gaining popularity.
While Grab and Uber are reluctant to reveal their driver numbers, Go-Jek claims to have around 200,000 drivers nationwide, half of whom operate in Greater Jakarta.
University students are also a potential target market, amid promising sales in cities with numerous higher education institutions.
The general manager for marketing and distribution at automotive distributor PT Mitra Pinasthika Mustika's (MPM) East Java office, Abdy Ronotana, said the company had seen its sales in Malang, home to over two dozen universities, grow by 5 percent year-on-year (yoy) during the first five months of the year, much higher than the province's average of 0.8 percent.
"The demand for motorcycles in education hubs, like Malang, is always sustainable, with the inflow of new students every year," he said.
Abdy also acknowledged that motorcycle sales in the province's industrial areas had dropped significantly over recent months as many factories had laid off workers.
MPM, the main distributor of Honda motorcycles, held a market share of over 70 percent in domestic motorcycle sales in the January-May period. Competing brands are Yamaha (24.2 percent), Kawasaki (1.86 percent), Suzuki (1.12 percent) and TVS (0.04 percent).
Separately, automotive financing giant Adira Finance's president director Willy S. Dharma admitted that the company had become more selective in disbursing motorcycle financing to minimize bad loans. "We also have to give financing to employees who are working in companies in order to reduce the risk of non-performing loans," he said.
Bank Central Asia (BCA) chief economist David Sumual, meanwhile, suggested that the free fall of motorcycle sales could only be cushioned by certain measures, including the loosening of the government's loan-to-value (LTV) policy to allow customers to make smaller down payments.
"But for the short term, demand from traditional ojek and app-based ojek drivers could help to cushion the decline in motorcycle sales," he said. (win)
Source: http://www.thejakartapost.com/news/2016/06/17/ojek-drivers-cushion-motorcycle-sales-plunge.html