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Latest Reports Automotive Industry
Like with most sectors, the automotive sector of Indonesia received a wave of fresh air as most of the COVID-19-related social and business restrictions were scrapped by the government at the end of 2022. And, when the government also scrapped the vaccine-booster requirement for traveling into, and across, the country in June 2023 we can argue that the COVID-19 crisis is truly over.
On Monday 04 January 2021 Indonesia Investments released its December 2020 report. The report zooms in on the key economic, political and social events that occurred in Indonesia in the month of December 2020. Special attention is given to Indonesia's 2020 regional elections, the latest cabinet reshuffle, and the electric vehicle.
On Wednesday (05/08/2020) Indonesia Investments released the July 2020 edition of its monthly report. In this edition, titled 'A Modest Rebound', we discuss the impact of the COVID-19 crisis on the Indonesian economy, Indonesia's automotive industry, and a range of other topics.
Indonesia's car sales rose 11.1 percent year-on-year (y/y) to 95,892 vehicles (wholesale) in January 2018 according to the latest data from the Association of Indonesian Automotive Industries (Gaikindo). This is a very promising start of the year as the January 2018 car sales figure is the highest January figure since 2014.
Indonesia's Ministry of Environment and Forestry emphasizes that manufacturers in the country's automotive industry do not need to be concerned about the implementation of European emission standards, the standards that define the acceptable limits for exhaust emissions of new vehicles.
Chinese car manufacturers seem not afraid to compete with their Japanese counterparts on Indonesian soil. After Wuling Motors arrived in Indonesia in mid-2017, now another Chinese car-maker, Sokonindo Automobile, has started operations in Indonesia, Southeast Asia's largest car market.
The Association of Indonesian Automotive Industries (Gaikindo) lowered its forecast for car sales in Indonesia in full-year 2017. Initially Gaikindo expected to see 1.1 million car sales in Indonesia this year. However, the target has now been revised to 1.06 million units. The revision was particularly attributed to weak sales within the (lower) middle class segment.
Based on the latest data from the Association of Indonesian Automotive Industries (Gaikindo), automotive sales in Indonesia rose 2.6 percent year-on-year (y/y) to 94,461 vehicles in October 2017 on the back of rising demand for commercial vehicles. Growing demand is boosted by recovering coal and crude palm oil (CPO) prices.
General Motors manufactured its last Holden car at the Adelaide factory on Friday (20/10), hence effectively ending the once-iconic Australian car industry. From now on Australians will have to buy cars that were imported from abroad. While other governments have been keeping national automotive industries alive after the financial crisis through bailouts, the Australian government saw no real economic reason to keep this industry alive.
The Indonesian government is preparing two locations - Kendal (Central Java) and Gresik (East Java) - as alternatives for the automotive manufacturing industry in Indonesia. Currently, West Java (specifically Karawang) is the nation's car manufacturing hub where most carmakers establish their manufacturing facilities.
Latest Columns Automotive Industry
Many – including Indonesia Investments – are convinced that the electric vehicle is the automotive industry’s future. And, when we take a look at the past two decades or so, we detect a significant acceleration in the development of the electric vehicle.
The biggest problem for western car-makers is the dominant position of Japan in Indonesia's automotive market. Japan has been dominating the Indonesian car market since the 1970s and there are no signs that this situation will change in the short or long term.
The government of Indonesia eyes rapid growth of car exports in the two decades ahead. By the year 2035 the government targets to see car shipments from Indonesia rise to 1.5 million vehicles (from around 200,000 exported units in 2016). By that year, exported vehicles should contribute 37.5 percent of total Indonesian car sales.
A new player in Indonesia's automotive industry - backed by big carmakers from China and the USA - is eager to compete for market share in Indonesia. On Tuesday (11/07) SGMW Motor Indonesia inaugurated its first manufacturing facility in Cikarang (West Java). This local company is a joint venture between (1) SAIC Motor Corporation Ltd, a Chinese state-owned automotive design and manufacturing company headquartered in Shanghai, (2) General Motors Company (GM), a US multinational automotive corporation headquartered in Detroit, and (3) Liuzhou Wuling Automobile Industry Co Ltd, a China-based car manufacturer.
Indonesia's automotive industry is centered around Bekasi, Karawang and Purwakarta in West Java. In this area various big global car-makers invested in industrial estates as well as car and component manufacturing plants. Therefore, it has become the production base of Indonesia's automotive sector (including motorcycles) and can be labelled the "Detroit of Indonesia". Detroit (Michigan, USA) is the birthplace of the US automotive industry and is home to car giants General Motor, Chrysler, and Ford.
In early 2016 Ford Motor Indonesia, the local unit of American car-maker Ford Motor Company, announced it will have completed its exit from Indonesia (and Japan) by the start of 2017. This decision was made because Ford has been unable to compete with its Japanese counterparts on the markets of Indonesia and Japan. The sudden move to exit Indonesia was not warmly welcomed by Ford Motor Co's dealers in Indonesia. The 31 Ford local dealerships demanded USD $75 million in compensation. More recently, Ford Motor Indonesia has become the center of a tax scandal.
About a week ago Ford Motor Indonesia, the local unit of American car manufacturer Ford Motor Company, announced it decided to exit Indonesia and Japan as the firm is unable to compete with its Japanese counterparts. The Ford dealers in Indonesia are still open, meaning consumers can still buy the existing stock of Ford cars. Ford buyers can also still count on after-sales services or the purchase of spare-parts. Next year, however, these stores will be shut. Ford is still studying how to continue services (including guarantee) after 2017 for those that bought a Ford vehicle.
The Indonesian government approved the request of Indonesia's automotive sector to be exempted from the anti-dumping duties that have been imposed on imports of steel from specific countries. Through Finance Ministry Regulation No. 65/2013 on Anti-Import Duties, the government set import duties - ranging between 7 and 55.6 percent - for steel imports from China, Japan, South Korea, Taiwan and Vietnam in an effort to protect the domestic steel manufacturing industry amid a global steel oversupply (particularly caused by a supply glut in China).
Whereas the Indonesian Automotive Industry Association (Gaikindo), expects Indonesia's car sales to rise five percent (y/y) in 2016 on the back of improving economic conditions, US-based consulting firm Frost & Sullivan expects to see a 4.3 percent decline in the country's car sales this year as continued rupiah depreciation and persistently low commodity prices undermine Indonesians' purchasing power.
Both car sales and motorcycle sales declined in 2015 in Indonesia. Primary reason for this decline was people's weaker purchasing power amid the slowing economy and persistently low commodity prices. Indonesia's GDP growth is estimated to have fallen to 4.7 percent year-on-year (y/y), the slowest growth pace since 2009. Meanwhile, amid the sluggish global economy (especially China's slowdown) and falling oil prices, Indonesia gains relatively little from its commodity exports.
Associated businesses Automotive Industry
