Tuesday, November 22, 2005

Srinivashan to hit Indonesia roads

One of the most interesting results of president Susilo Bambang Yudhoyono’s visit to India is the commitment from the country’s investor to build a motorcycle manufacturing plant in Indonesia.

The anonymous investor would invest US$80 million in Indonesia, the fastest growing motorcycle consumer in the world. The investor would name the motorcycle Srinivashan. Sounds familiar, right?

Well, I guess everybody’s guessing whether the name has something to do with Marimutu Sinivasan, once one of the most powerful businessmen in Indonesia with Indian roots. But, Sinivasan’s diversified group of Texmaco, is in limbo due to huge debt to the state (US$3 billion).

I tried to google the name of Srinivashan, big zero! Then I tried to find out all the motorcycle producers in India. It is TVS Motor Company, formerly known as TVS Suzuki Limited. The Group's principal activity is to manufacture and sell automotive two-wheelers and automotive components. Its Chairman & Managing Director is Venu Srinivasan. That's the name come from.

Data shows that Honda is the largest manufacturer in India with 2.6 million units per year. Honda is also the largest manufacturer in Indonesia.

Last year, total motorcycles sold in Indonesian market almost reached 4 million units and is expected to grow 20% this year to around 5 million units, ranked third in the world after China (12 million units) and India (6 million). With average selling price of US$1,000, we are talking about US$5 billion market.

As gasoline price increasingly expensive amid poor public transportation, motorcycle is the most efficient mode of transportation in Indonesia.

Key players in the industry are trying to keep up the demand with new capacities. Honda, for example, has just opened its new US$100 million manufacturing line in Cikarang, West Java to bring the total capacity to 2.6 million units per year.

The second largest player, Yamaha, operates plants with combined capacity of 2 million units and followed by Suzuki at 1.5 million units per year. Kawasaki is ranked four.

Newcomers in the market are Lippo Group, Bosowa Motor (owned by Aksa Mahmud, brother-in-law of Vice President Jusuf Kalla), and some joint ventures between local and China motorcycle producers. The later produce what the local popularly called Mocin (motorcycle from China) to differentiate with the heavily dominating Japanese brands.

Should Srinivashan hit Indonesian roads, people might call it Moin (Motor India). With US$80 million investment, Srinivashan might perform better than Mocin and bite the market away, little bit from Japan brands.

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