Motorcycle sales rise 44 percent despite higher fuel prices

The Jakarta Post , Jakarta | Wed, 07/09/2008 10:48 AM | Business

Despite recent rises in fuel prices and lending interest rates, motorcycle sales rose 44 percent in the first half of this year compared to in the same period last year, an association reports.

"The industry sold more than 3 million motorcycles in the first six months, compared to 2.1 million last year," Gunadi Sindhu Winata, head of Indonesian Motorcycle Industry Association (AISI) and CEO of Indomobil Group, said Monday.

"That is a 44 percent increase."

The government increased fuel prices in May by 28.7 percent, a move that has pushed up inflation and interest rates.

However, Gunadi predicts sales in the second half of the year will help secure the industry's full-year target of 5.2 million units. He said the year's first semester growth was supported by high public purchasing power and stable bank rates.

"The financing firms have not adjusted their rates, as Bank Indonesia only increased the BI rate slightly. So it has not impacted customers. Should the BI rate go too high, say to 12 percent, adjustment will be unavoidable and we may see customers' credit capability being eroded," he said.

However, adjustments to sales prices loom on the horizon.

Gunadi predicts motorcycle makers will raise their prices by the end of this month or early next month to compensate for higher transportation costs due to expensive material costs and the latest fuel hike.

"It (the rise) will be moderate to avoid a huge impact on the customers, probably around 5 percent," he said, adding that many manufacturers would soon launch new products.

"New motorcycle models are always a drive to push the market. The competition between brands is very tight and new models have the competitive edge," he remarked.

In the first half of the year, the market continued to be dominated by Japanese makers Honda, Yamaha and Suzuki, which together accounted for 98 percent of market share. (mri)

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