Mandalika MotoGP: Looking at Motorcycle Industry in Indonesia
From Mandalika’s MotoGP success, here is a look at Indonesia’s analysis of the motorcycle industry.
The state-owned energy company, Pertamina, is the main sponsor of Indonesia’s first MotoGP in Lombok, West Nusa Tenggara, Indonesia. The Pertamina Grand Prix of Indonesia was expected to generate USD 209 million or equivalent to IDR 3 trillion in economic turnover in Indonesia.
Nicke Widyawati, Pertamina’s president director, said they see the race having an impact on a regional and national level. The events before the race alone generated around IDR 500 billion. During and after the race, which was started on March 18, 2022, was estimated to increase six times. The demand for food and accommodation created thousands of work employment, and flights and hotels were fully booked to cater to 100,000 fans coming from all over the world. The live race at the Pertamina Mandalika International Street Circuit in Lombok brings up 1,300 new micro-, small- and medium-sized enterprises specializing in culinary.
Pertamina is proud of its involvement as a sponsor in constructing the 4.3-kilometer circuit which has spent IDR 1.2 trillion. This circuit is part of the government plan to push the development of the tourism industry in one of the least developed provinces in Indonesia. West Nusa Tenggara’s income per capita was IDR 17 million last year, compared to Indonesia’s income per capita of IDR 40.8 million.
Two-Wheeler Market Trend in Indonesia
The Indonesian two-wheeler industry is the third-largest in the world after India and China. In 2021, the total motorcycle sales increased by 38.6%, or 5.17 million in revenue, compared to the previous year. It is expected to show an annual growth rate (CAGR 2022–2026) of 11%. Indonesian economic growth is expected to accelerate in the last quarter of 2021, after harsh lockdown regulation. Consumer confidence improved sharply as restrictions eased.
However, recovery was not easy, with restrictions for production and distribution caused by Covid-19 measures and consumer demand is lower than expected in Q3 of 2020. In 2022, the market is expected to keep recovering towards 6 million sales (pre-covid level), while the government is studying additional incentives for electric vehicles.
The market is dominated mostly by Japanese manufacturers. All of them produce and export locally, over 95% of the market share. The leading motorcycle companies in Indonesia are Honda, Yamaha, Kawasaki, and Suzuki.
Future Prospects
Indonesia’s two-wheeler market is anticipated to reach USD 10 billion by 2025. Increase in disposable income, rising demand for cheaper personal transportation, coupled with increasing female riders, improving road infrastructure and growing popularity of credit & loan facilities are the key factors responsible for growth of the two-wheelers market in Indonesia.
A study has shown that the demand for electric motorcycles is projected to gain a ground for electric vehicles (EV) adoption in Indonesia as bike cost will become competitive in 2022. A study report by McKinsey & Company showed Indonesia has one of the world’s highest potential for EV adoption, especially with motorcycles. By 2030, two-wheeler sales is projected to hit 6.4 million, 1.9 million of which could be electronic two-wheelers.
Recently, ride-hailing app Gojek announced plans to make every car and motorcycle on its platform an EV by 2030. The goal was outlined in Gojek’s first sustainability report launched on Apr 30. The report noted that an increase in EV adoption means reduced emissions and improved air quality.
BRIGHT Indonesia as Your Local Partner
With the constant shift of consumer behaviour and demands, it would need a lot of in-depth research about the Indonesian motorcycle industry. Therefore, to enter the Indonesian market, you would need the right local partner.
BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.
BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:
- Assist you in expanding and developing your business by identification of potential partners.
- Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arranging business meetings, and acting as a liaison.
- Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
- Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.
For more information, email info@brightindonesia.net.
*This article is written by Nadia Syailendra
