Yamaha: Cartel Practices Not to Blame for High Price of Motor Scooters

Miftah Ardhian
28 Juli 2016, 08:27
motor
Arief Kamaludin | Katadata

Two top motorcycle producers, Yamaha Indonesia Motor Manufacturing (YIMM) and Astra Honda Motor (AHM), have denied engaging in cartel practices in the sale of automatic motor scooters across Indonesia. Flagging up evidence to prove that they have not been involved in cartel practices,the two companies rebuffed allegations that they have conspired to control prices.

Yamaha Indonesia Executive Vice President Dionisius Bety said the accusations that a sales cartel existed were unproven for several reasons.

First, Yamaha has spent a significant amount of money on promotion. If the company was involved in a cartel, it would not need to have major promotions.

Second is the fierce product war between Yamaha and Honda, in which the two companies have engaged in black campaigns against each other.

The third reason is the massive discounts, such as low down payment offers. If Yamaha was involved in a cartel, it would not need to offer these product discounts.

(Read: Yamaha& Honda Suspected of Cartel Behaviour, In Danger of Being Fined IDR 25bn)

As for the accusations that Yamaha and Honda monopolise the motor scooter market in Indonesia, Dion explained that operating in this segment meant investing huge sums to finance promotions and technology development. Therefore, not all motorcycle brands were able to compete in the scooter segment.

Dion said investigators from the Business Competition Supervisory Commission (KPPU) made a fatal flaw in their investigation of this case. When the KPPU accused Yamaha of cartel practices, it claimed that such practices led to Yamaha's profits increasing 47.4 percent. However, the financial report used as a basis for this investigation stated Yamaha's profits rose just 7.4 percent.

Dion also questioned the use of e-mail as evidence during the investigation because he receives e-mails from various sources every day. Also, the e-mail used as evidence was a personal e-mail from a high-ranking official at the company and not the official e-mail address of the company. So he believes that the e-mail was not submissible as evidence.

“I want to say I receive tens of e-mails every day. E-mails from various sources, some even asking me out on a date. Is that evidence of me having an affair?” he said at the company's defence hearing at the KPPU office in Jakarta on Tuesday (26/7).

Dion also refuted rumours that scooters in Indonesia are the most expensive in ASEAN. He said Indonesia actually offers the lowest scooter prices in ASEAN, at an average of only IDR 9.3 million per unit. However, there are other fees involved in scooter sales, such as VAT, income tax, transfer of title fees, license plate fees and vehicle ownership document fees. Added up, these fees can amount to up to 42 percent of the price of a scooter.

(Read: Transport Minister to Limit Number of Motorcycles at Next Year’s Eid Exodus)

On the same occasion, Honda’s Deputy Head of Corporate Communication Ahmad Muhibbudin said Honda had no reason to cheat the industry because an investigation in 2013/14 showed Honda's market was way above its competitors. Therefore, it would make no sense if Honda, as a market leader, made deals with competitors that had a much smaller market share.

Honda was also confused as to why it was involved in this case because the e-mail used as evidence in this case was a personal e-mail of a high-ranking official at Yamaha, which had nothing to do with Honda. “That was a one-sided internal communication that had nothing to with Honda, and appeared to accuse us of making price deals,” said Ahmad.

He also denied KPPU allegations that Honda reaped excessive profits from scooter sales. Ahmad said Honda's profits dropped last year despite increasing sales as a result of inflation, the high cost of wages, and moves by the company maintain buying power by absorbing rupiah.

Honda has urged the KPPU to stop its investigation into this case. Yamaha has also asked the commission to close this case. Even if the KPPU chooses to pursue the case further, Yamaha is confident it willbe exonerated. Dion said Yamaha is currently calculating the losses arising from this case, and if they proved significant, Yamaha may decide to sue the KPPU.

“We will calculate the damage the lawsuit has caused. Building a brand is not cheap and takes a long time. But destroying it is very quick and easy. We will do another review to see whether there were any indications of deliberate intention,” Dion said.

Editor: Yura Syahrul
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