From fuel to future: The evolution of Indonesia’s two-wheeler market

Indonesia’s two-wheeler market has long been one of the largest and most dynamic in the world. With motorcycles serving as an essential mode of transport for millions of Indonesians—especially in densely populated urban areas and rural regions—this market has evolved into a major pillar of the country’s automotive industry. But as global trends shift toward sustainability, digitalisation, and localisation, the sector finds itself at a turning point.

A Market Driven by Mass Mobility

Indonesia consistently ranks among the top global markets for motorcycles. According to the Association of Indonesia Automotive Industries (GAIKINDO) and the Indonesian Motorcycle Industry Association (AISI), over 5.8 million motorcycles were sold in 2023, and sales are projected to rise further through 2025.

Key players dominating the local market include PT Astra Honda Motor, Yamaha Indonesia Motor Manufacturing, Suzuki Indomobil Motor, and Kawasaki Motor Indonesia. Honda, in particular, holds the lion’s share, with over 70% of total national motorcycle sales. Yamaha follows as a strong second player.

This dominance is built on affordability, fuel efficiency, and an extensive dealer/service network, making motorcycles the go-to vehicle for short-distance travel and daily commuting. Yet as fuel prices fluctuate and environmental regulations tighten, change is accelerating.

The Rise of Electric Two-Wheelers (E2Ws)

Indonesia’s government has set an ambitious target: 13 million electric two-wheelers on the road by 2030. This shift is being driven by multiple factors—rising fuel costs, urban air pollution, and national policies aimed at cutting greenhouse gas emissions. In line with these goals, the government introduced Presidential Regulation No. 55/2019, which provides incentives for EV production and infrastructure.

A growing number of domestic players such as Gesits, Volta, and Selis are now entering the electric motorcycle market, offering locally assembled or manufactured models. Even traditional ICE (internal combustion engine) leaders like Honda and Yamaha are piloting e-motorcycles to tap into this emerging demand.

Despite the slow initial adoption, momentum is building. According to Statista and McKinsey’s ASEAN mobility outlook, the Indonesian electric two-wheeler market is expected to grow at a CAGR of over 30% through 2030, with unit sales potentially reaching over 1 million per year by 2027.

Key challenges remain, such as:

• Limited charging infrastructure
• Battery swap standardisation
• Consumer price sensitivity
• After-sales service availability

However, public-private collaboration and government subsidies are beginning to address these issues.

Localisation: Indonesia’s Strategic Advantage

With a large domestic demand and relatively low labor costs, Indonesia is positioning itself as a hub for motorcycle manufacturing—both for local use and exports to Southeast Asia and beyond.

The Indonesian government, through the Ministry of Industry, actively encourages local content requirements (TKDN) to reduce reliance on imported components. Companies like Yamaha Motor Parts Manufacturing Indonesia and PT Adyawinsa Plastics Industry are contributing to the local supply chain, particularly in components like frames, plastics, wiring harnesses, and ECUs.

Additionally, Vicario Research and Consulting noted in a recent forecast that localising supply chains could reduce production costs by 15–20%, especially critical as EV adoption grows.

Technology and Smart Manufacturing Trends

Digital transformation is also reshaping two-wheeler production. Manufacturers are increasingly adopting Industry 4.0 technologies such as robotic welding, automated assembly lines, and real-time quality monitoring.

In particular, casting simulation software, tooling solutions for EV components, and precision metal stamping are now at the forefront of innovation. These are essential for producing lightweight, high-strength parts that meet the unique demands of electric motorcycles.

For instance, Yamaha Motor Parts Manufacturing Indonesia recently introduced advanced simulation in its casting processes to improve component quality and reduce development cycles. Companies are also integrating ISO certification standards to meet international safety and performance benchmarks for EV production.

Looking Ahead: Where Innovation Meets Industry

To support industry-wide collaboration and knowledge exchange, Indonesia will host the 2025 ASEAN Advanced Automotive Manufacturing Summit (AMPE) on November 12–13 in Cikarang, one of the nation’s most prominent industrial corridors.

Organised by Ringier Trade Media, the AMPE Summit will bring together government leaders, OEMs, suppliers, and technology experts to discuss emerging trends in automotive and motorcycle manufacturing. Sessions will cover a wide range of relevant topics, such as:

• Advanced tooling for EV components
• Localisation strategies
• Smart robotics in assembly lines
• Simulation in casting and production
• ISO standards for autonomous and EV production

Confirmed speakers include representatives from GAIKINDO, Toyota Motor Manufacturing Indonesia, Yamaha Motor Parts Manufacturing Indonesia, and PT Trimitra Chitrahasta.

With its rich mix of keynote talks, technical presentations, and factory tours (including Astra Otoparts and Hyundai Motor Company), the summit is expected to serve as a critical platform for shaping the future of Indonesia’s two-wheeler and broader automotive sector.

Final Thoughts

Indonesia’s two-wheeler market is evolving rapidly—from mass motorisation to electric mobility, from global supply chains to domestic manufacturing ecosystems. With strong policy backing, emerging local players, and increased investment in smart technologies, the sector is poised for a transformative decade.

The 2025 AMPE Summit will offer invaluable insights into these shifts, helping stakeholders align strategies and tap into new growth opportunities in Southeast Asia’s largest two-wheeler market.