Investment in Indonesia's Automotive Sector: Nissan's New Plant

Antonio Zara, President Director of Nissan Motor Indonesia (NMI), said the new factory should become operational in September 2017. Zara added that the Indonesian market forms one of the most strategic markets for Yokohama-headquartered Nissan and therefore this investment in Purwakarta is important for overall growth of the Japanese car manufacturer. Nissan started to invest in Indonesia in 2001.

Fumitoshi Yoshikawa, Vice President Director at NMI, said the construction of this new engine and transmission parts plant will support further development of Indonesia's automotive industry as a whole. The new plant will produce products in accordance with the global standard of Nissan.

Per July 2016, sales of Nissan in Indonesia reached 8,796 vehicles so far this year. Meanwhile, sales of Datsun (an automobile brand owned by Nissan) reached 20,981 units in the same period. As such, Nissan forms a relatively small player in Indonesia's automotive industry, an industry that is dominated by Astra International (controlling nearly 60 percent of the market) with its Toyota, Daihatsu, and Isuzu brands.

Sales of Nissan fell 25 percent (y/y) to 25,108 vehicles in full-year 2015. This decline continued more severely in the first seven months of 2016. Sales of Nissan vehicles in Indonesia plunged 48.3 percent (y/y) to 8,784 units in the January-July 2016 period. Nissan's market share in Indonesia is currently less than 2.5 percent. The directors of NMI did not elaborate on these plunging sales. However, they did inform that in the next couple of years NMI targets to control 8 percent of the Indonesian market.

Most Popular Car Brands in Indonesia:

Car Brand	Sales Jan-July 2016
Toyota	200,649
Honda	118,970
Daihatsu	100,199
Mitsubishi	56,674
Suzuki	54,723
Nissan	8,796
Isuzu	8,784

^{Source: Gaikindo}

Zara also informed that Nissan will not launch any new models this year in Indonesia. However, next year the company will launch several new models on the Indonesian market, particularly in the crossover utility vehicle segment (a popular car type in Indonesia).

Indonesia remains a very attractive market for car manufacturers even though car sales have declined since 2014. This decline was caused by the country's economic slowdown (resulting in weakening purchasing power and sliding consumer confidence). However, on the middle and long term the potential remains high as there are many Indonesians who do not own a car. It is estimated that there are only 70 car for every 1,000 Indonesians, implying a very low per capita car ratio (the total population numbers more than 255 million people). Therefore, in combination with rising per capita GDP (as economic growth is expected to accelerate) Indonesia forms a great market.

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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	84,999
February	86,486	103,278	111,824	88,740	88,201
March	87,917	95,996	113,067	99,410	94,009
April	87,144	102,257	106,124	81,600	84,712
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	62,585
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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