Motorcycle Sales Plunge in Further Sign of Weakening Consumption

JUNE 15, 2015

Jakarta. Motorcycle sales in Indonesia plummeted by 35 percent in the first five months of 2015 from the corresponding period last year, signalling a massive slowdown in consumer purchasing power.

Sales from January to May totaled 2.66 million units, according to the Indonesia Motorcycle Manufacturers Association (AISI), down from 3.46 million in the same period in 2014.

In May alone, sales fell 10.4 percent year-on-year to 482,691 units.

Sigit Kumala, the head of commercial activities at AISI, said manufacturers had cut the number of units distributed to dealers nationwide to avoid an oversupply.

“If the distribution is pushed, the price will become unhealthy [...] distributors may be forced to give massive discounts,” Sigit told Investor Daily.

AISI chairman Gunadi Sinduwinata blamed lower consumer purchasing power for the plunge in motorbike sales.

“The spiraling inflation and higher fuel costs have eroded purchasing power,” he said, adding that consumers tended to postpone the purchase of durable goods during such situations.

In May, inflation accelerated to 7.15 percent year-on-year from an annualized 6.79 percent in May, on the back of higher food and gasoline prices.

May inflation hit a five-month peak and was higher than expected. A Reuters poll had estimated May inflation at 7.0 percent.

The decrease in motorcycle sales is another sign from major economic indicators signaling a slowdown in Indonesia’s economy.

Data from the Indonesian Cement Association (ASI) showed cement sales — another key economic — declining by 2.8 percent to 23.13 million metric tons in the January-May period.

Investor Daily