Motorcycle Sales Could Miss This Year's Target Due To Weak Consumer Demand

BY :RAHAJENG KH

JUNE 23, 2015

Jakarta. The Indonesian Motorcycle Manufacturers Association, or AISI, will likely miss their motorcycle sales target this year as consumers in Southeast Asia's largest economy continue to hold back spending amid a nationwide economic slowdown, its chairman said on Monday.

Gunadi Sinduwinata, chairman of AISI, said that after May sales fell below target it was unlikely the association will achieve the year-end sales goals.

"A surge in sales in the upcoming Ramadan season won't compensate [for] the decline," he said in Jakarta.

"Rising prices in consumer goods and fuel are eating into consumers purchasing power. Increasingly, people now need to save up more money to buy motorcycles, so they're more careful and more focused on buying staple goods."

Data from AISI showed that motorcycle sales in Indonesia fell by 23 percent to 2.7 million units in the January to May period compared to 3.5 million in the same period last year — the biggest decline in five years. 

Despite his pessimism, Gunadi noted that the association has not yet decided if it will lower its sales target for the year.

AISI projectedits members will sell up to 6.8 million motorcycle units this year, down 14 percent from 7.9 million motorcycle units sold last year. 

Motorcycle sales, along with car and cement sales — the three typical economic indicators in Indonesia — have all declined as of May, signaling the economy has not recovered since its sluggish growth in the first quarter.

Indonesia's economy saw its weakest growth in five years between January and March as it moved at an annualized rate of 4.7 percent. Household spending makes up 56 percent of the economy. 

Facing the slow consumer demand, the Indonesia Automotive Manufacturers Association (Gaikindo) had already lowered this year's sales target back in May to 1.1 million cars, down 8 percent from 1.2 million cars that were sold in 2014.

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