The company was founded in year 1989 with name PT Mitrapusaka Artha Finance. Business licenses that were granted are for Consumer Financing Agencies under decree of Ministry of Finance Republic of Indonesia No 1151/KMK.013/1989 dated October 17,1989 and for Leasing, Factoring and Consumer Financing under decree of Ministry of Finance Republic of Indonesia No 1 004/KMK,013/1990 dated August 30, 1990. Finally, two years after or by November 7,1991, it became PT Federal International Finance.

PT FIF is a joint-owned company between PT Astra International Tbk (99.9999%) and PT Arya Kharisma (0,0001 %). Currently, the company is still the market leader in Indonesia in providing financing service for new motorcycle Honda by 62.9% share (in year 2005). By comparing to total sales of motorcycle Honda (cash and credit sales) within the same year, PT FIF has 45.1 % share.

PT FIF is a financing company under Astra group that is mainly focusing on providing financing services for motorcycle market (new & used). Currently, the company is having closed-relation with motorcycle dealers in getting any potential customers who are interested to apply for motorcycle lease or credit service.

The number of motorcycle in Indonesia is getting higher from year to year due to some main factors as follow:

* poor public transportation system that forces people to have motorcycle as their transportation

* bad road traffic condition (mostly traffic jams) at most major cities that also influences people to have motorcycle to reduce their travel time

* paradigm shift of people at sub urban area that perceives motorcycle is to replace bicycle or "becak" as alternative transportation

* the use of motorcycle to make some money as "ojek" at sub urban area

In year 2005, the number motorcycle in Indonesia is approximately at 28.8 million with total population of 222.35 million people (estimated). There is a prediction that by year 2008 there will be around 43.8 million motorcycles with total population of 232.79 million people or a ratio of 1 : 5.

The motorcycle market will be theoretically defined saturated once the ratio reaches 1 : 5. It means that the FIF business in financing new motorcycle market is also saturated. The company's growth will be stagnant by year 2008 as it has no more room to growth while the company needs to improve or to defend current bottom line. In year 2005, company's ROA (Return on Assets) is 8% and ROE (Return on Equity) is 34% which is lower than in year 2004 of 12% and 46%, respectively, and also the lowest since year 2001.

The FIF needs to preserve its financing services business right away before 2008. So, the above reasons really pushed the company to look for other businesses but still under the same business license. The company has decided that the alternative business which is quite promising is in used motorcycle business. This confidence is backed up by the fact that company is still a strong market leader supported by online computer network with full support from its principal (PT Astra Honda Motor).

Company's decision to go into used motorcycle market is actually in-line with marketing theory of Blue Ocean Strategy to go beyond the existing market of new motorcycle. Its heavily reliance on motorcycle dealers may greatly affect current company marketing strategies for entering used motorcycle business as dealers can have big influence to end-customers in choosing their lease services.



Blue Ocean Strategy is a concept of creating "Uncontested Market Space and Make the Competition Irrelevant". It is a research-based marketing strategy concept that can be applied by FIF to defend its market share of nearly saturated motorcycle market. So, instead of dividing up existing and often shrinking-market demand and benchmarking competitors, blue ocean strategy is about growing demand and breaking away from the current competition. By integrating new marketing strategy (or blue ocean strategy) with current company marketing strategy for used motorcycle market and comparing it with any survey results or field observations, there should be some definite conclusions on the gaps that may exist in between especially in its relation in dealing with motorcycle dealers and also with end customers while at the same time there might be some new marketing program needed to overcome those gaps.

As marketing concepts, surveys and field observations come into play with case discussion and analysis between the company and the group, recommendations emerge to improve the strategy which hopefully has positive impact to the company's preference in achieving its business goals.

Our group recommendations of marketing strategy development are coming from 2 (two) most important factors of used motorcycle business itself: Financing Strategy and Product

Strategy. First, in Financing Strategy, the strategy is really to focus on financing for low to mid class segments. Second, in Product Strategy, the strategy is really to explore potential retail customers as well as collective or group customers (as the existing Honda user) and to establish Honda Used Centre (HUC) in order to constantly build strong image of brand Honda used motorcycle (Honda UMC).





Research Location : PT Federal International Finance (PT FIF)

Confidential until 2012