Demak Motorcycles shuts shop; plausible reasons explained

KUALA LUMPUR: Yes, you read it right! Demak Motorcycles, our indigenous bike maker, has shut shop. From what seemed like a very promising news of this young motorcycle maker, has now come down to a full stop. To give a bit of history, from 2002 Demak used to bring in Chinese parts and assemble motorcycles out of their first facility in Kuching, Sarawak. And some of their motorcycles used to start from a ridiculously low price of RM 3,500. Within a few years, the company set up another facility in Sri Lanka using the same formula - bringing in affordable parts from China and then assembling the vehicles in Sri Lanka. Demak had also set up a new facility just last year at Banting, Selangor.

So while everything seemed rosy at first, it is being speculated that Demak ran into troubled waters sooner than the Titanic sank. A company which was well known for giving dealers a handsome commission on each motorcycle didn't have enough money to pay its workers in the end. While Demak did sell their bikes with a lower profit margin, such a business model can only be sustained provided the volumes are high. Demak’s twin facilities could churn up close to 2,000,00 motorcycles in a year, the company could only manage to sell 55,000. While the rest were exported, this still didn’t go with the volumes theory. It is being said that their facilities were most of the time running at half capacity.

The dealers lobby too is to be blamed for Demak’s demise. The more than 5,000 strong dealer network for entire Malaysia has a union and the motorcycle manufacturers are at their mercy. If a certain manufacturer doesn’t find favour with the lobby, then their products aren’t marketed and they die a slow death. Demak, apparently, sensing the situation that they were in, had approached the union and asked them to take a cut on their margin. The latter flatly refused and this is said to have been one of the reasons for Demak’s downfall.

All said and done, we will have to just wait till we get an official confirmation from Demak. Till then, don’t believe in rumors that are being floated around on Whatsapp and social media groups.