PT Mabua Harley Davidson, the Indonesian authorised distributor for Harley Davidson, will cut ties with the American-based motorcycle company and stop their retail in Indonesia in 2016 because of declining of sales.
According to the company, only 470 motorcycles were sold throughout 2015 in Indonesia, a drop of 50 percent compared to the previous year.
“I would say 90 percent (of the closure) are caused by external problems,” Chief Executive Officer of MRA Group, the parent company of Mabua, Soetikno Soedarjo, said last week.
According to Soetikno, PT Mabua Harley Davidson managed to sell 1,000 units in 2014. However, after the government raised taxes for the sales of Luxury Goods (PPnBM) from 75 percent to 125 percent in April 2014, sales have plummeted.
At the same time, the weakening of the rupiah against the dollar and the slowing down of the economy, as well as various taxes, are too burdensome for the business.
“So a unit that was worth Rp 800 million is now priced at Rp 1.2 billion. A unit that was worth Rp 500 million is now Rp 700 million,” he said.
These soaring prices have turned away potential buyers, who would rather buy a luxury car at similar prices.
“So they choose luxury cars instead. It covers them from the rain” Soetikno said.
Though small in numbers, Harley Davidson owners irk other motorists for their perceived selfishness and arrogance on the road.
In recent years there have been cases of Harley Davidson riders clashing with other road users.
Two Japanese companies and two South Korean electronics makers also announced their departure from Indonesia in January, forcing them to lay off 1,700 workers.
US car manufacturer Ford has said it will cease operations in Indonesia from the second half of this year, a decision that came as a shock as it had only recently launched a product line-up.