Automotive Market of Indonesia: Sales of City Cars Fall Sharply

Jongkie Sugiarto, Chairman of the Indonesian Automotive Industry Association (Gaikindo), says he detects a strong shift of consumers to the low-cost green car (LCGC), a shift that comes at the expense of the city car.

The LCGC is an affordable and fuel-efficient car that was introduced to the Indonesian market in late-2013 after the central government had offered tax incentives to those car manufacturers that meet the requirements of the government's fuel efficiency targets. On average, these LCGC units have a price tag of around IDR 140 million (approx. USD $10,500) making them attractive for Indonesia's large middle class segment.

However, not only the city car is a victim of the rise of the LCGC. Also the multipurpose vehicle (MPV), which - by far - is the most popular vehicle in Indonesia, felt the impact of the arrival of the LCGC although the MPV's dominating role in the nation's automotive sector will persist. The MPV is known as "the people carrier" because this vehicle is bigger and taller than other cars (it can carry up to seven passengers). Indonesians enjoy taking trips with the family (and/or invite some friends) and therefore a big car is required.

The LCGC, however, is becoming increasingly popular in Southeast Asia's largest economy, particularly due to its affordable price. Sugiarto says the price of a car will remain the most influential factor for the Indonesian consumer, in general, when buying a car as long as Indonesia's per capita GDP is below USD $4,000. This means that consumers will prefer to buy the LCGC (with a price tag of around IDR 140 million) instead of the city car that is priced in the range of IDR 150 - 200 million (approx. USD $11,000 - $15,000). Meanwhile, the size of the city car and LCGC does not differ markedly and therefore does not influence consumers' decision.

Read more: Overview and Analysis of Indonesia's Automotive Industry

Gaikindo and the government have already met to discuss new policies (for example tax policies) that can make Indonesia's non-LCGC car industry more competitive. More meetings between both sides are bound to follow in the period ahead. For Gaikindo it is important that all segments within Indonesia's automotive industry are growing, and not just the LCGC segment.

City Car Sales in Indonesia:

Car Brand	2016 Jan-Feb	2017 Jan-Feb	Y/Y Growth
Honda Brio	1,523	1,232	-19.1%
Nissan March	462	561	+21.4%
Daihatsu Sirion	400	240	-40.0%
Toyota Etios	837	160	-80.9%
Mitsubishi Mirage	651	167	-74.4%
Kia Picanto	49	55	+12.2%
Hyundai i10	19	14	-26.3%
Suzuki Splash	375	-	-
others	1	82	-
Total	4,317	2,511	-41.8%

^{Source: Gaikindo}

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	86,601
February	103,278	111,824	88,740	88,208	96,722
March	95,996	113,067	99,410	94,092
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	100,215
December	97,706	78,802	73,264	86,573
Total	1,229,916	1,208,019	1,013,291	1,061,735

 

	2009	2010	2011	2012	2013	2014	2015	2016
Car Sales (car units)	486,061	764,710	894,164	1,116,230	1,229,916	1,208,019	1,013,291	1,061,735
Car Exports (car units)	56,669	85,769	107,932	173,368	170,907	202,273	207,691

^{Source: Gaikindo}

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