Automotive Sector: Bright Future for Car Sales in Indonesia?
Passenger car sales in Indonesia are estimated to rise 11.5 percent per year in the 2017-2021 period supported by Indonesia's expanding middle class. This conclusion originates from research that was conducted by London-based BMI Research. Meanwhile, business consulting firm Frost and Sullivan sees Indonesian car sales rise 5 percent (y/y) to 1.11 million vehicles in 2017 supported by the popular low cost green cars and multipurpose vehicles.
BMI Research predicts that Indonesian households with an annual income of between USD $10,000 and $25,000 will form 38.4 percent of Indonesia's total population in 2021, from 23.2 percent at start 2017. Those households that earn an annual USD $5,000 - $10,000 will form 23.2 percent of the total Indonesian population by 2021, down significantly from 41.4 percent in 2017. The above-mentioned figures imply that, generally, Indonesians' purchasing power will strengthen considerably over the next couple of years amid expectation of accelerating economic growth. This should then translate into rising car sales in Southeast Asia's largest economy where per capita car ownership is still very low.
Besides economic growth and the expanding middle class, other factors that are considered to boost car sales in Indonesia in the next couple of years are rising investment in infrastructure development (including various toll roads) as well as the stable rupiah exchange rate. These findings originate from a survey that was conducted by Frost and Sullivan at the start of 2017.
Vivek Vaidya, Vice President of the Mobility Practice at Frost and Sullivan, also said the successful tax amnesty program of Indonesia, which runs until 31 March 2017, strengthens Indonesia's automotive sector and added that by 2020 Indonesia's middle class is estimated to number 150 million.
Read more: Analysis of Indonesia's Automotive Industry
Although the low cost green car and multipurpose vehicle are the best sellers in Indonesia, the sport utility vehicle is gaining popularity rapidly and may actually replace the multipurpose vehicle as Indonesia's most popular vehicle.
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 | 85,002 |
| February | 86,486 | 103,278 | 111,824 | 88,740 | 88,208 |
| March | 87,917 | 95,996 | 113,067 | 99,410 | 94,092 |
| April | 87,144 | 102,257 | 106,124 | 81,600 | 84,770 |
| May | 95,541 | 99,697 | 96,872 | 79,375 | 88,567 |
| June | 101,746 | 104,268 | 110,614 | 82,172 | 91,488 |
| July | 102,511 | 112,178 | 91,334 | 55,615 | 61,891 |
| August | 76,445 | 77,964 | 96,652 | 90,537 | 96,282 |
| September | 102,100 | 115,974 | 102,572 | 93,038 | 92,541 |
| October | 106,754 | 112,039 | 105,222 | 88,408 | 92,106 |
| November | 103,703 | 111,841 | 91,327 | 86,938 | 100,215 |
| December | 89,456 | 97,706 | 78,802 | 73,264 | 86,573 |
| Total | 1,116,230 |
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