Otomoto’s Business Plan amidst the Improved Automotive Market

As a consequence of the global spread of the coronavirus, people’s daily mobility has changed significantly. The impact is also felt by various parties in the business, including the Indonesian automotive industry.

At the beginning of the pandemic, it was quite hit by the decline in economic transactions, but gradually improved. Changes in patterns in society also occur, for example, more and more people are considering using private vehicles instead of public transportation.

To accommodate the increasingly significant transactions for motorcycle or car products, several companies are also intensifying their initiatives by establishing a vehicle buying/selling platform. Otomoto is one that focuses on serving the needs of motorcycles.

The industry of automotive is one of the mainstay sectors that has a significant contribution to the Indonesian economy.

It is stated on the Ministry of Industry website that this sector has contributed an investment value of IDR 99.16 trillion with a total production capacity of 2.35 million units per year and has absorbed 38.39 thousand direct workers.

Otomoto Indonesia Co-Founder Marwoto Soebiakno said, “At the beginning of the pandemic, the automotive industry was quite hit, so our operations were also quite disrupted. We also had to adapt a lot to market conditions. However, this was quite a positive impact for Otomoto and its used motorcycle showroom partners. we.”

Companies Face Various Challenges

Of course, all startups experience many challenges. According to Marwoto, their main challenge is market education.

Otomoto’s market segment is similar to several startups in the FMCG sector, such as Ula, WarungPintar, and others, so special strategies and efforts are needed to familiarize users with online automotive transactions.

However, his team saw this as a great opportunity to be able to digitize the market. For example, many motorcyclists are financially disturbed and have to let go of their vehicles.

On the other hand, many users are afraid of using public transportation, preferring to buy a private vehicle. In this case, the production of new vehicles is quite hampered due to the closed factories and other things.

Therefore, the used vehicle market is an attractive alternative. This rebranded company from Sumo365 has the main business model of C2B Model (Customer to Business). This is similar to Carro, Carsome & OLX Autos (formerly BeliMobilGue).

This platform facilitates motorcyclists who want to sell or exchange their units online easily and quickly. There are two mainstay features, namely Price Engine and Smart Inspection which are currently still focused on motorcycles.

Through this feature, motorcyclists can have price openness and maximize sale/purchase/exchange transactions. In addition, users can also apply for loans/re-financing on the Otomoto platform.

The company claims that it is experiencing quite good growth, especially in 2021. During the first semester of 2021, Revenue was recorded at CMGR 31.2% and increased quite dramatically in Q3 and the team is optimistic that they can achieve maximum achievement in Q4 this year.

The Company’s Future plan

In line with the recovery of the automotive industry, especially motorcycles, Otomoto believes motorcycle sales will continue to grow. According to company data, before the pandemic, the average annual motorcycle sales stood at 6 million.

During the 2020 pandemic, that number had dropped to 4.3 million. As of August 2021, overall motorcycle sales in Indonesia have reached 3.2 million and are predicted to reach 4.7-5 million by the end of this year.

“Therefore, we are quite confident that the automotive market will continue to grow,” added Marwoto. In addition, the company also sees two things that will change the dynamics in the automotive market and will have a positive impact. First, growth in the logistics industry.

Many startups such as Shipper, Waresix, etc., and conventional 3PLs such as JNE, Tiki, etc. In small cities and districts (tier-2), logistics is still quite limited. So that penetration into these cities and regencies will open new markets.