Automotive Industry Indonesia: Exports Expected to Grow in 2016

Despite optimism about rising car exports in full-year 2016, the latest data from Gaikindo show that Indonesia's car exports in fact fell 17.9 percent (y/y) to 73,524 CBUs in the January-May 2016 period from 89,544 units in the same period one year earlier. However, this weak performance is mainly due to the delay in exports of the Toyota All New Fortuner and All New Kijang Innova - both manufactured by Toyota Motor Manufacturing Indonesia (TMMIN) - in the first quarter of the year (this delay was related to the release of the new Fortuner and Innova models). However, starting from March 2016 exports of both models have commenced.

The biggest export destination for Indonesian cars is the ASEAN region. However, Indonesia still lags far behind Thailand and Malaysia when it comes to car exports. These neighbors of Indonesia export more than 500,000 vehicles, each, per year. Gaikindo Chairman Sugiarto believes that Indonesia's car export performance can improve further provided that domestic manufacturers boost the production of the sport utility vehicle (SUV) and the sedan. For both these types there exists big foreign demand. Indonesia, however, mostly produces the multiple-purpose vehicle (MPV). It would also help if the Indonesian government cuts the luxury goods tax on cars, Sugiarto added. This tax makes prices of Indonesian cars expensive.

Currently, Indonesia's largest car exporters are Toyota Motor Manufacturing Indonesia and Astra Daihatsu Motor.

Indonesia targets to become the largest car manufacturer and exporter in the ASEAN region on the long term, surpassing Thailand (the Indonesian government selected the automotive industry as one of the nation's priority industries). In that context the Indonesian government prepared a tax allowance and tax holiday in order to attract (foreign) investment, specifically investment in the manufacturing of car components and spare parts. It will require the development of a domestic car component manufacturing industry in order to become the largest regional force in the automotive industry. Although nearly all the globe's major automotive companies have production facilities in Indonesia, most of these companies continue to import the components from the parent countries.

Read more: Overview of Indonesia's Automotive Industry

I Gusti Putu Suryawirawan, Director General of Metal, Machinery, Transportation Equipment and Electronic Industries at Indonesia's Industry Ministry, added that the quality of Indonesia's human resources in the automotive industry has to be improved as well. One of the reasons why Thailand achieved success in the automotive industry is the availability of highly-skilled human resources. To support the development of high-quality workers, the Indonesian government plans to open a education center for the production of car components this year.

The Finance and Industry Ministries of Indonesia will also discuss the possibility of cutting the luxury goods tax, specifically for sedan cars, in order to boost the export performance.

Indonesian Car Sales (CBU):

Month	Sold Cars       2012	Sold Cars       2013	Sold Cars       2014	Sold Cars       2015	Sold Cars       2016
January	76,427	96,718	103,609	94,194	85,012
February	86,486	103,278	111,824	88,740	88,250
March	87,917	95,996	113,067	99,410	93,990
April	87,144	102,257	106,124	81,600	84,600
May	95,541	99,697	96,872	79,375	88,537
June	101,746	104,268	110,614	82,172	91,471
July	102,511	112,178	91,334	55,615
August	76,445	77,964	96,652	90,537
September	102,100	115,974	102,572	93,038
October	106,754	112,039	105,222	88,408
November	103,703	111,841	91,327	86,938
December	89,456	97,706	78,802	73,264
Total	1,116,230	1,229,916	1,208,019	1,013,291

 

	2008	2009	2010	2011	2012	2013	2014	2015
Car Sales (car units)	607,805	486,061	764,710	894,164	1,116,230	1,229,916	1,208,019	1,013,291
Car Exports (car units)	100,982	56,669	85,769	107,932	173,368	170,907	202,273	207,691

^{Source: Gaikindo}

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