Being the fourth most populated country, Indonesia is also a bus powerhouse. Indonesia’s bus imports are projected to reach $114 million by 2026. This is a sharp increase from $93 million in 2021. On average, demand has grown 9.1 percent year on year since 1994.
Besides increasing imports, exports are expected to reach $107 million by 2026, up from $83 million in 2021. On average, supply grew 9.6 percent year on year since 1995. Indonesia is placed 25th on the list of bus-exporting countries in 2021. Speaking to Asian Buses was Eka Lovyan, Chief Operation Officer, Indotruck Utama and Harry Iskandar, Country Manager, Volvo Buses Indonesia, to provide insights into this bustling and booming market. The market is generally split into two categories: the front-engine buses and those with the engine mounted in the rear, being 8 to 12 meters to 13.5 meters. Prior to the pandemic, between 1500 and 1 800 units of the latter type of buses would be imported, while in the last year this number dropped to as low as 500 units.
Lovyan agreed in the statement that Indonesia is a vastly different country from other nations in Southeast Asia, being large and fragmented with thousands of islands. He also noted that there is a shift in the way people travel throughout the country, whereby previously air travel was the preferred choice. Nowadays however, more and more routes open with more and more buses plying these routes, making transportation with buses more accessible and affordable. “Certainly, in many places we cannot compete with the use of private transportation or trains.” A surge in bus uses can be observed in bigger cities, especially in Jakarta, where Trans Jakarta is pushing for more public transport. City buses are becoming more and more popular, slowly competing with vans, transporting up to ten passengers, similar to Jeepneys in the Philippines. Intercity buses still hold an impression of being not very comfortable by most passengers, although some places have been connected since the 1960s.
The increased use of buses goes hand in hand with the improvement of infrastructure on the main islands. Many highways are being upgraded, and the shift to a new capital will be a major boost for the bus industry. Not only are the planners for the new capital city gearing the place up for more buses to move commuters, but it is also planned right away for electric buses. Currently, the mandated emission standard is EURO IV. However, Volvo is already offering all buses in EURO V standard, being already one step ahead. In Indonesia, PETRONAS is a major supplier of Diesel Exhaust Fluid (DEF), which is now seeing price reductions and expansions in availability.
“What we also notice is that the government is pushing for more school buses to be deployed. Currently, most parents would drop off and pick up their children using private cars and picking them up as well later on.” As one can imagine, the move to school buses would be a great relief to the overburdened road network. In big cities, city councils are now enforcing policies that allow for use of private cars only on alternate days. Naturally, this would require alternatives offered to allow people to commute more effectively. In Jakarta, some 4 000 buses are currently in operation; it is said that that this number is to be increased to 10 000.
Being the distributor for Volvo buses, PT Indomobil Sukses Internasional Tbk (Indomobil), has started additional collaboration with Volvo Buses in 2022 to locally assemble buses. The assembly facilities are to reduce import duty and allow for the opportunity to offer cleaner technology in a more competitive way. Thus, Indomobil and Volvo Buses work closely with customers and develop vehicle solutions that can bring them closer to the business objectives of their customers. With the CKD facility, Indomobil hopes to break into the mass market as well, offering a wider range of products. Lovyan added that this, as it also constitutes a significant investment from Volvo Buses, sends a clear message to the market about the seriousness of the two partners in Indonesia. Here, Volvo is hoping to capitalise on their reputation for quality and safety.
The decision to enhance the partnership with Indomobil was motivated by the fact that the company already has an extensive service network. Currently, Indomobil is also adding service stations along the most popular intercity routes to ensure seamless running of the vehicles. In Jakarta, Volvo buses are sold with full service and maintenance contracts, guaranteeing 24-hour emergency breakdown service. “The very extensive service network is really making this the best possible partner in the country,” added Lovyan. This network will be forming the backbone of the operation as the country is now connecting cities and highways in a bid to offer better connectivity for the transport of both, passengers and goods.
With the renewed momentum, Indomobil might be up against strong competitors, however, this may also be an advantage. Being the youngest, one may actually be able to deduct the market trends from what others are selling, piggybacking on their mistakes and thus being able to accelerate the introduction of the right products. Financing also depends on the ability to demonstrate that the credit is secure and having a strong brand, Volvo, as partner certainly helps in securing financing of the buses for operators. Now that customers are also able to compare all European bus chassis, Lovyan notices that customers are making a switch to the Volvo brand. Iskandar also has strong confidence that Volvo Buses would be the preferred business partner to the customers in Indonesia.
What Indomobil has observed is that the creation of new highways, paired with the introduction of new, comfortable buses, has elevated the standing of the profession of bus drivers with more younger people looking to being a bus driver. It is also becoming more common to see female drivers on long distance routes. Besides being an alternative to air travel, buses are now also more and more popular among tour operators ferrying tourists, companies, such as mining operations, to move their workers about. The use in such application is, according to Iskandar, a manifestation of the believes of customers in the quality and safety promise made by the Swedish brand.
Indonesia, like many other countries, is realising that the chokehold on cities can only be alleviated by reducing the number of cars on the roads. This can be achieved by offering suitable public transportation solutions. This, as often highlighted by Volvo, has to be done by means of integrated systems, comprising of buses, trains, MRT and LRT. “Many of Indonesia’s cities would benefit greatly from having BRT (Bus Rapid Transit) systems and we hope that we can play an integral role in the movement towards better transport efficiency in the country,” Lovyan said in closing.
Thanks to Asian Buses for the collaboration in developing this article.