Economic Update Indonesia: Car & Cement Sales in First Quarter 2015

Regarding full-year 2014, economic expansion of Indonesia fell to a five-year low of 5.02 percent (y/y) amid global turmoil (low commodity prices impacting negatively on the country’s export performance) and domestic rebalancing (Bank Indonesia’s higher interest rate environment).

Indonesia's Quarterly GDP Growth 2012–2014 (annual % change):

Year	Quarter I	Quarter II	Quarter III	Quarter IV
2014	5.14	5.03	4.92	5.01
2013	6.03	5.81	5.62	5.72
2012	6.30	6.40	6.17	6.11

^{Source: Statistics Indonesia (BPS)}

According to the latest data from the Indonesian Automotive Industry Association (Gaikindo), Indonesian car sales (wholesale) declined 14 percent (y/y) to 282,250 vehicles in the first quarter of 2015. Amid slowing economic growth (a trend that started in 2011), Indonesians’ purchasing power has weakened, while Indonesian businesses are reluctant to purchase commercial vehicles due to the globe’s low commodity prices (which pressure operational costs). However, despite the negative figure at the start of 2015, Gaikindo has not altered its car sales target for 2015. The institution expects to see car sales reach 1.2 units this year, more-or-less flat from car sales in the preceding year.

Indonesian Car Sales (CBU):

Month	Sold Cars 2012	Sold Cars 2013	Sold Cars 2014	Sold Cars 2015
January	76,427	96,718	103,609	94,149
February	86,486	103,278	111,824	88,738
March	87,917	95,996	113,067	99,363
April	87,144	102,257	106,124
May	95,541	99,697	96,872
June	101,746	104,268	110,614
July	102,511	112,178	91,334
August	76,445	77,964	96,652
September	102,100	115,974	102,572
October	106,754	112,039	105,222
November	103,703	111,841	91,327
December	89,456	97,706	78,802
Total	1,116,230	1,229,916	1,208,019	282,250

^{Source: Gaikindo}

Meanwhile, Indonesian cement sales also fell in the first quarter of 2015. Based on data from the Indonesian Cement Association (ASI), sales declined 3.3 percent (y/y) to 13.6 million metric tons in the January-March period. Primary reason for this decline is that several infrastructure and property projects are still in the preparation stage. For example, the Indonesian government has not started its ambitious one million homes program yet. Last month, Indonesian President Joko Widodo announced that the government would support the construction of one million additional homes across the archipelago over the next five years (the groundbreaking of this project is scheduled for 30 April 2015).

Widodo Santoso, Chairman of the Indonesian Cement Association, added that the rainy season at the start of 2015 also led to the delay of several large projects. However, given the government’s commitment to boost infrastructure development, the association targets to see a total of 62 million metric tons of cement sales in 2015, up 3.3 percent from last year.

Indonesian Cement Sales 2008-2015:

Year	Cement Sales	YoY Growth
2015¹	62 million	+3.3%
2014	60 million	+3.3%
2013	58 million	+5.6%
2012	55 million	+14.6%
2011	48 million	+20.0%
2010	40 million	+4.2%
2009	38.4 million	+1.1%
2008	38 million	-

^{¹ ASI target
Source: Indonesian Cement Association (ASI)}

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