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. Automoto become one that focuses on serving the needs of motorcycles.

The auto industry during the pandemic

The automotive industry is one of the mainstay sectors that has a significant contribution to the national economy. It is stated on the Ministry of Industry website that this sector has contributed an investment value of Rp. 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 the conditions. market. However, this is quite a positive impact for Otomoto and partners showroom our used motorbikes."

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, for example Ula, WarungPintar, and others, so it takes a special strategy and effort to familiarize users with auto transactions. online. However, his team sees this as a great opportunity for us 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 to use 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.

Company rebrand from Sumo365 it has a main business model C2B Model (Customer to Business). It is similar to Carro, Carsome & OLX Cars (the previous one was BeliMobilGue). This platform facilitates motorcyclists who want to sell or exchange their units online 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.

Future plan

In line with recovery 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 enough confident that market automotive 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 towns and counties (tier-2), logistics is still quite limited. So that penetration into these cities and regencies will open new markets.

"We see that the need last mile delivery will certainly have a positive impact on the automotive industry, including Otomoto. Second, start the entry of electric vehicles. Currently, EV (Electric Vehicle) still has a fairly high price. However, the government predicts that EV prices could drop by up to 40%, with infrastructure development such as SPBKLU. Also, battery factory initiatives and others. This will certainly provide fresh air for the car and motorcycle industry," said Marwoto.

Seeing investors who are starting to be interested in channeling funding in the automotive industry, as recently obtained by Carsome and Car, Otomoto is currently doing preparations internally and is targeting to fundraising in early Q1 2022. In addition, the team also plans to expand in Java. The company wants to be able to reach a wider market in tier 1 cities and hopes to cover cities in tier 2.

"By business model, may still have the same foundation, but we are also piloting for some O2O (online-to-offline) solutions which can be more helpful and improve Otomoto's services to motorcycle users," concluded Marwoto.