Gaikindo Lowers Forecast for Indonesia's 2017 Car Sales

Jongkie Sugiarto, Chairman of Gaikindo, said the Indonesian economy has not shown significant acceleration in 2017 and therefore consumers' purchasing power has not improved markedly. Instead, analysts believe that Indonesians currently prefer to save their money on bank accounts (hence third-party funds in Indonesia's banking system have been rising rapidly).

But it is interesting to note that sales growth of the more expensive types of cars is higher than than sales growth of those vehicles that are more affordable. This indicates that the richer segments of Indonesian society are less affected by stagnant economic growth.

So far this year (January-October 2017), a total of 898,218 cars were sold in Indonesia, the largest car market in Southeast Asia. This is only a modest 2.5 percent (y/y) increase from the nation's car sales figure in the same period one year earlier.

Fransiscus Soerjopranoto, Executive General Manager at Toyota Astra Motor (TAM), said the automotive industry of Indonesia remains challenging. When retail sales turned out weak around the Idul Fitri period earlier this year (when there usually occurs a marked increase in retail sales), car-makers in Indonesia started to revise down their sales targets for full-year 2017 car sales.

Besides cautious consumers, Soerjopranoto added that tighter policies surrounding car credit is also a reason why we see bleak car sales growth in 2017. Due to rising non-performing loan ratios at financial institutions, they have become more careful when disbursing credit to consumers, especially for those cars that are priced below IDR 200 million (approx. USD $15,000). This therefore involves the more affordable deals. Soerjopranoto says the majority of car sales in Indonesia involve deals that are priced below IDR 200 million (for example the popular low cost green car, LCGC).

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	86,324
February	103,278	111,824	88,740	88,208	95,159
March	95,996	113,067	99,410	94,092	102,336
April	102,257	106,124	81,600	84,770	89,623
May	99,697	96,872	79,375	88,567	94,091
June	104,268	110,614	82,172	91,488	66,370
July	112,178	91,334	55,615	61,891	84,905
August	77,964	96,652	90,537	96,282	96,466
September	115,974	102,572	93,038	92,541	87,645
October	112,039	105,222	88,408	92,106	94,461
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

^{Source: Gaikindo}

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