Honda turns its eyes on Asia

Bike sales are dropping in Europe and the US.

JAKARTA: Unreliable public transport, congested roads and a booming middle class make populous Indonesia one of the world’s largest motorcycle markets, and Japan’s Honda Motor wants a bigger slice of the pie.

With sales dropping in Europe and the United States in recent years, Honda is eyeing a 60-percent stake in Indonesia’s market over the next decade, revving up the competition with its biggest rival, Yamaha.

“The potential demand for motorcycles in Indonesia is huge, and we’ll keep increasing production in line with consumers’ purchasing power,” Indonesia’s Astra Honda Motor communication head Kristanto told AFP.

Honda and Yamaha are almost neck-and-neck. Honda served 46 percent of the market in 2010 with 3.4 million sales units, and Yamaha served 45 percent at 3.3 million units. Together they supply almost 90 percent of demand.

But Honda is hungry to capture 52 percent of the expected 8.2 million units this year, Kristanto said.

Yamaha is keeping cool despite Honda’s ambitions, as its sales are forecast to jump 6.3 percent this year.

“We are not going to worry. We’ll do our best and focus on our own strategy, especially giving customers the best service,” Yamaha Motor Kencana Indonesia spokesman Eko Prabowo said.

Automakers have been keen to tap the growing motorcycle market in Southeast Asia’s biggest economy, which has 240 million people. Indonesia’s motorcycle market is the world’s third biggest after China and India.

National annual growth of private vehicle ownership has averaged 11 to 13 percent for the past decade, well above other developed countries, according to the University of Gadjah Mada.

“Daihatsu, Toyota, Nissan, they all want to have production plants here,” Indonesian Trade Minister Hatta Rajasa said.

But Indonesia’s growing middle class is demanding far more motorcycles than cars — car sales in 2010 topped 700,000, while motorcycle sales surpassed seven million.

The average income for Indonesians has risen from $650 in 2000 to around $3,000 today, according to UN data.

“And with small loans available, a person can take home a motorcycle for only 500,000 rupiah ($55) for the first installment,” Bahana Securities analyst Pandu Anugrah said.

Indonesia is one of the fastest-growing economies in the world. Its output expansion is expected to top six percent for this year and next.

Despite rapid development, slow progress on transport infrastructure makes commuting in the capital Jakarta unpleasant and inconvenient.

Poor road planning and management, which has created a persistent traffic problem in Jakarta, costs the economy more than $3 billion a year, according to the University of Indonesia, and is deterring foreign investment.

Traffic has become a problem for other major cities as well, including Yogyakarta and Surabaya, both on Java island.

But the country’s curse is Honda’s blessing. “We’ll keep producing practical transportation as a solution for this problem for people of all levels in this country,” Kristanto said.

Published in The Express Tribune, September 26^th,  2011.