Motorcycle sales slowest
in 18 months on economic


Sales of new motorcycles nose-dived by 22 percent in January as the country started to feel the full impact of the global economic crisis and downturn which has already triggered a wave of job layoffs.

Motorcycle producers, who are mostly Japanese based, only sold 367,736 units in January as against 473,060 units in the same period of 2008, according to the Indonesian Motorcycle Industry Association (AISI) and motorcycle producer PT Astra Honda Motor in a report
issued Wednesday.

The figure is the lowest since July 2007. The January sales dropped by 8.6 percent compared to December.

Honda sold 179,685 units in January or about 49  percent of the market share. This was followed by Yamaha, which sold 162,135 units or about a 44 percent market share.

This left Suzuki and Kawasaki trailing far behind their two rivals.

Motorcycle sales are often used to gauge the purchasing power of middle to low-income consumers

While AISI did not explain the sales drop, numerous analysts had  already painted a bleaker outlook given the deepening global crisis and economic downturn.

According to figures from the Indonesian Employers Association (Apindo), in Jakarta alone around 4,000 employees had already been laid off in December and about 6,000 more might end up jobless by the end of January.

On a national scale, as many as 27,578 workers were laid off from last September to Jan. 23. and almost 25,000 will follow soon, according to the Manpower and Transmigration Ministry.
Motorcycle sales topped a record 6.21 million units last year as against 4.68 million units in 2007, according to AISI last month.

Four-stroke engine motorcycles with below 125 cylinder capacity are the country’s most popular type due to fuel efficiency, low maintenance costs and being easy to ride.

They are designed to suit the Indonesian average body size and can weave in and out of traffic jams.

Indonesia is the third largest market for motorcycles in the world, after China and India.
Industry players forecast new motorcycle sales will decline by around 30 percent this year.

Finance Minister Sri Mulyani Indrawati forecasts that the economy will still grow this year by between 4.7 and 5.5 percent, at the most.

Bank Indonesia (BI) has been slashing its benchmark interest rates to boost consumer purchasing power, which normally propels more than 70 percent of the economy.

BI recently cut its benchmark interest rate by 50 basis points to 8.25 percent, earlier this month.

Industry players, however, believed BI’s move would not have a major  impact until the second semester of this year when purchasing power is expected to start to pick up. About 80 percent of motorcycle purchases are financed by loans with financing companies offering interest rates of between 18 and 20 percent.

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