Preliminary domestic motorcycle sales for FY10 rose 26% YoY to 7.36m units, a historical high. Previously, AISI (Indo Association of Motorcycle Industries) predicted sales of 7m units. Astra’s Honda commanded 46.1% market share with 3.4m units sold in 2010, while Yahama at 44.8% share with 3.3m units sold, followed by Suzuki with 7.1% share.
Comment: We expect motorcycle sales to grow 15% this year after a strong run last year. Motorcycle sales dropped 6% in 2009 due to the financial crisis. Industry players expect motorcycle sales to remain strong this year to 8.3m units, given motorcycle are exempted from the ban on subsidized fuel use. Key thing to watch is inflation and interest rate and how it will affect the financing companies in lending out to buyers.
At the same time, car sales reached 763,000 units, up 57% YoY, and just like motorcycle sales, it is also a historical high.
Comment: For FY11, we expect national car sales to soften by 10% due to the ban on subsidized fuel usage for passenger cars to be rolled out in Greater Jakarta in Mar2011, and the remaining of Java-Bali by end of 2011. We think our assumption is conservative given lack of public transport in Indonesia, difficult implementation of the ban, and low car penetration despite the record sales. Progressive tax on car purchases is another headwind for the market; we also think implementation is not going to be easy.
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