Indonesia's domestic motorcycle sales rose 13.8 percent year-on-year (y/y) to 473,879 units in January 2017, from 416,263 units in the same month one year earlier. This growth is attributed to Indonesians' improving purchasing power supported by recovering commodity prices, particularly coal and crude palm oil (CPO). Gunadi Sindhuwinata, General Chairman of the Indonesian Motorcycle Industry Association (AISI), is optimistic that Indonesia's motorcycle sales will rebound in 2017 - after two years of slowdown - on the back of accelerating economic growth and rising commodity prices.

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Indonesia has the biggest motorcycle market within the ASEAN region. It is estimated that Indonesia accounts for 70 percent of total motorcycle sales in ASEAN. This implies that the slowdown in Indonesia's motorcycle sales has a big impact on overall sales in the region. Based on data from the ASEAN Automotive Federation (AAF), total motorcycle sales in ASEAN in the first ten months of 2016 fell 1.2 percent to 7.91 million from sales in the same period one year earlier.

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The Indonesian Motorcycle Industry Association (AISI) expects Indonesia's motorcycle sales to rebound in 2017. Based on the latest estimates, sales of two-wheelers will rise 10 percent (y/y) to 6.6 million next year from an estimated 6 million vehicles in 2016. This year sales are expected to drop slightly over 7 percent (y/y) compared to 6.48 million sold motorcycles in 2015. AISI Chairman Gunadi Sindhuwinata said there are several reasons that should cause rebounding motorcycle sales next year.

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Indonesia's motorcycle sales fell 10 percent (y/y) to 4.35 million in the first three quarters of 2016 from 4.82 million motorcycle units in the same period one year earlier. Meanwhile, in the month September 2016 a total of 555,820 motorcycles were sold in Indonesia, down 8 percent (y/y) from sales in the same month one year earlier. Gunadi Sindhuwinata, Chairman of the Indonesian Motorcycle Manufacturers Association (AISI), informed that Indonesia's motorcycle sales have still not returned to normal levels in 2016.

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Indonesian motorcycle exports have grown by a whopping 87 percent year-on-year (y/y) to 27,066 units in February 2016 from 14,433 units in the same month one year earlier. Sigit Kumala, Chairman of the commercial department of the Indonesian Motorcycle Industry Association (AISI), said this solid performance occurred on the back of the market expansion strategy applied by Indonesian motorcycle manufacturers. He added that Indonesia's export performance (in terms of motorcycle sales) has been improving since the second half of 2016.

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Indonesian motorcycle sales declined 8 percent year-on-year (y/y) to 535,682 units in November 2015 from 582,331 units in the same month last year. In the first 11 months of 2015, Indonesian motorcycle sales stand at a total of 5.6 million units, down 18.5 percent (y/y) from sales in the same period last year, reflecting weakened purchasing power in Southeast Asia's largest economy amid the economic slowdown, weak commodity prices, and high inflation during the first three quarters of the year. The Indonesian Motorcycle Industry Association (AISI) expects to see 6.3 million sold motorcycle units in full-year 2015.

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Amid Indonesia’s economic slowdown, the country’s motorcycle sales are most likely to decline in 2015. In the first eight months of 2015 a total of 4,218,089 motorcycles were sold in Southeast Asia’s largest economy, down 21.1 percent (year-on-year) from the same period last year. However, there is one positive fact regarding Indonesia’s motorcycle sales. In August 2015, a total of 622,089 motorcycle units were sold, the highest monthly sales figure since October 2014 and the first monthly growth after seven straight months of decline.

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Similar to the automotive industry, Indonesia’s motorcycle industry also feels the effects of lower demand so far this year. Due to Indonesia’s slowing economic growth in combination with the high domestic interest rate and depreciating rupiah, Indonesians’ purchasing power has weakened and thus Indonesian consumers have become more careful before purchasing motorcycles and cars. As a result stocks of motorcycles at local dealers have been rising and one way to have a healthier supply-demand ratio is by limiting motorcycle production.

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According to the latest survey of Bank Indonesia (the central bank of Indonesia), the country’s January retail sales accelerated 10.4 percent year-on-year (y/y), up from the 3.3 percentage point growth pace (y/y) in the preceding month. Retail sales in the first month of the year in Southeast Asia’s largest economy accelerated because of higher sales of information & communication equipment (+29.9 percent y/y) as well as food, beverages & tobacco products (+15.1 percent y/y).

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Domestic motorcycle sales in Indonesia declined 5 percent year-on-year (y/y) to 680,642 units in October 2014 (from the same month last year). Particularly weaker sales of the underbone motorcycle impacted negatively on total October motorcycle sales. As people are concerned about a looming subsidized fuel price hike this month (causing accelerated inflation, thus curbing people’s purchasing power), consumers postpone the purchase of a motorcycle. The government is expected to raise prices of subsidized fuels by almost 50 percent.

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The Indonesian Motorcycle Industry Association (AISI) says Indonesia's motorcycle exports should rise by 50 percent (y/y) to around 342,000 units in 2016. Gunadi Sindhuwinata, General Chairman of the AISI, stated that Indonesia's motorcycle exports have been impressive so far this year, rising 76 percent (y/y) to 97,778 units in the January-April 2016 period. This impressive export performance is supported by the choice of several global motorcycle manufacturers to make Indonesia their production hub for specific motorcycles.

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Domestic sales of motorcycles in Indonesia fell 11 percent to 580,288 units in January 2014. The main reason for this decline in the first month of the year were severe floods brought about by high rainfall amid a peak of the rainy season. These weather conditions disrupted the distribution of motorcycles from factories to dealers. As a result, all motorcycle brands recorded lower sales figures according to data released by the Indonesian Motorcycle Industry Association (Aisi). However, more factors were at play.

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Domestic sales of motorcycles in Indonesia are expected to have fallen by 20 percent to 550,000 in December 2013 compared to the previous month (688,527). According to the Chairman of the commercial department of the Indonesian Motorcycle Industry Association (AISI), Sigit Kumala, this decline is not the result of slowing demand for motorcycles but due to the limited amount of working days amid the Christmas and New Year holidays. This then led to less production and distribution of motorcycles to Indonesian dealers.

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Along with the increasing purchasing power of Indonesian people, purchases of motor vehicles (such as motorcycles and cars) in Indonesia, continue to grow. However, based on data from the Indonesian Motorcycle Industry Association (AISI), motorcycle sales fell by 12 percent in 2012, from 8.01 million units in 2011 to 7.06 million units in 2012. One reason behind this fall was the implementation of new government policy regarding down payment requirements (which have been imposed on vehicle loans since mid-2012).

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