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ocal motorcycle producers are bracing for slower sales growth next year with the upcoming increase in fuel prices being the primary factor curbing consumer demand.

Two-wheeler sales, an indicator of consumer spending in Southeast Asia'€™s biggest economy, was likely to drop in 2015 by 5 percent from the 8.1 million units expected for 2014, the Indonesian Motorcycle Industry Association (AISI) said.

Based on previous experience, fuel-price rises would severely hurt the sale of motorcycles as consumers'€™ purchasing appetite for goods other than primary needs weakened, AISI chairman Gunadi Sindhuwinata said on Saturday.

'€œHigher fuel prices mean consumers must spend more on their daily needs as prices of other consumer goods will climb. As a result, their aspiration to buy motorcycles will shrink,'€ he said.

Sales disruption would occur for three to four months and after that they might gradually pick up again, Gunadi added.

The new government of President Joko '€œJokowi'€ Widodo aims to raise the price of subsidized gasoline by Rp 3,000 (US$0.24) per liter as part of its effort to cut the cost of fuel subsidies, the savings will be allocated for infrastructure development.

The government had planned to announce the fuel-price hike early this month. However, it had to make a recalculation following the recent fall in global oil prices.

Despite the upcoming fuel-price hike, automobile makers grouped under the Indonesian Automotive Manufacturers (Gaikindo) are still upbeat about business, saying the effect will only impact sales in the first two months.

However, unlike cars, buyers of motorcycles are people on middle and lower incomes, and more vulnerable to any price adjustments.

Motorcycle sales rose by 3.52 percent to 6.76 million units in the first half of this year and the AISI has predicted the figure will hit 8.1 million units by year-end, higher than the 7.9 million units originally forecast.

Major manufacturer PT Astra Honda Motor maintained its position as market leader selling 4.25 million units, or 62.92 percent of the total market. PT Yamaha Indonesia Motor Manufacturing and Suzuki Motor Indonesia came in second and third place, with sales of 2.1 million units (31.06 percent market share) and 245,860 units (3.6 percent), respectively.

In terms of areas of distribution, Java saw 62.48 percent of the national sales, followed by Sumatra with 18.70 percent and Kalimantan with 7.05 percent.

Gunadi said that despite the gloomy outlook caused by the looming fuel-price increase, an encouraging factor to boost sales were upward movements of commodity prices such as palm oil and rubber, which mainly affect demand in areas outside Java.

Palm oil, the second-biggest contributor to Indonesia'€™s non-oil and gas exports, for instance, unexpectedly climbed by 12.29 percent to US$15.44 billion in the January-September period this year, signalling an improved outlook in the coming months.

Gunadi added that some of the new government'€™s development programs, particularly those to be introduced after the fuel-price hike, could also present enormous opportunities as they would spur economic growth.

'€œThe government'€™s programs will boost people'€™s incomes and have multiplier effects on many sectors,'€ he said.