Automotive Industry: Indonesia's Car Market Accelerates in Q1-2017

Based on the latest data from the Indonesian Automotive Industry Association
(Gaikindo), production of all car categories rose in Q1-2017 with the exception of the pick-up (-13.45 percent y/y), buss (-55.16 percent y/y), and the sedan (-6.86 percent y/y).

The low-cost green car (LCGC) remains the fastest-growing vehicle in Indonesia. Production of the LCGC rose 49.36 percent (y/y) to 66,052 units in Q1-2017. Since the introduction of the LCGC on the Indonesian market in late-2013, the LCGC is gaining market share at a rapid pace. Based on the latest data, the LCGC now accounts for 20.7 percent of total manufactured cars in Indonesia. This vehicle is an affordable and fuel efficient vehicle. Development of the LCGC industry was encouraged by Indonesia's central government after it had offered tax incentives to those car manufacturers who meet requirements regarding fuel efficiency targets.

Kukuh Kumara, General Secretary at Gaikindo, said rising production of cars in Indonesia in the first quarter of 2017 is a sign that the economy is improving. Increasing production is triggered by growing car sales, both on the domestic market of Indonesia and in export markets.

Car deliveries to dealers rose 5.96 percent (y/y) to 283,245 units in Q1-2017, while exports of Indonesian completely-built up (CBU) units rose 53.39 percent (y/y) to 56,371 units over the same period.

Regarding falling production rates of buses and pick-ups in Indonesia Kumara said both consumers and manufacturers are now - ahead of the Ramadan and Idul Fitri celebrations - focusing on manufacturing/purchasing other types of vehicles. Regarding the declining production rate of the sedan, he said this is in line with the drop in sedan production that has been ongoing over the past couple of years. This drop is related to the high luxury goods tax that makes the sedan an expensive vehicle in Indonesia.

Read more: Analysis of Indonesia's Automotive Industry

Considering Indonesia's economic growth is expected to continue to accelerate in the remainder of 2017, while tensions surrounding the 2017 gubernatorial election of Jakarta, blasphemy trial and imprisonment of former Jakarta Governor Ahok should ease (despite the outrageous decision to imprison him), production and sales of cars should continue to rise in Indonesia in the next couple of quarters.

The Industry Ministry of Indonesia is optimistic that the domestic automotive industry will manufacture a total of 2.5 million car units in 2020.

Indonesian Car Sales (CBU):

Month	Sold Cars    2013	Sold Cars    2014	Sold Cars    2015	Sold Cars    2016	Sold Cars    2017
January	96,718	103,609	94,194	85,002	86,253
February	103,278	111,824	88,740	88,208	94,859
March	95,996	113,067	99,410	94,092	101,484
April	102,257	106,124	81,600	84,770
May	99,697	96,872	79,375	88,567
June	104,268	110,614	82,172	91,488
July	112,178	91,334	55,615	61,891
August	77,964	96,652	90,537	96,282
September	115,974	102,572	93,038	92,541
October	112,039	105,222	88,408	92,106
November	111,841	91,327	86,938	100,365
December	97,706	78,802	73,264	86,547
Total	1,229,916	1,208,019	1,013,291	1,061,859

 

	2011	2012	2013	2014	2015	2016
Car Sales (car units)	894,164	1,116,230	1,229,916	1,208,019	1,013,291	1,061,859
Car Production (car units)	n.a.	n.a.	1,208,211	1,298,532	1,098,780	1,177,797

^{Source: Gaikindo}

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