Jongkie Sugiarto, Chairman of the Indonesian Automotive Industry Association (Gaikindo), says he detects a strong shift of consumers to the low-cost green car (LCGC), a shift that comes at the expense of the city car.

The LCGC is an affordable and fuel-efficient car that was introduced to the Indonesian market in late-2013 after the central government had offered tax incentives to those car manufacturers that meet the requirements of the government's fuel efficiency targets. On average, these LCGC units have a price tag of around IDR 140 million (approx. USD $10,500) making them attractive for Indonesia's large middle class segment.

However, not only the city car is a victim of the rise of the LCGC. Also the multipurpose vehicle (MPV), which - by far - is the most popular vehicle in Indonesia, felt the impact of the arrival of the LCGC although the MPV's dominating role in the nation's automotive sector will persist. The MPV is known as "the people carrier" because this vehicle is bigger and taller than other cars (it can carry up to seven passengers). Indonesians enjoy taking trips with the family (and/or invite some friends) and therefore a big car is required.

The LCGC, however, is becoming increasingly popular in Southeast Asia's largest economy, particularly due to its affordable price. Sugiarto says the price of a car will remain the most influential factor for the Indonesian consumer, in general, when buying a car as long as Indonesia's per capita GDP is below USD $4,000. This means that consumers will prefer to buy the LCGC (with a price tag of around IDR 140 million) instead of the city car that is priced in the range of IDR 150 - 200 million (approx. USD $11,000 - $15,000). Meanwhile, the size of the city car and LCGC does not differ markedly and therefore does not influence consumers' decision.

Read more: Overview and Analysis of Indonesia's Automotive Industry

Gaikindo and the government have already met to discuss new policies (for example tax policies) that can make Indonesia's non-LCGC car industry more competitive. More meetings between both sides are bound to follow in the period ahead. For Gaikindo it is important that all segments within Indonesia's automotive industry are growing, and not just the LCGC segment.

City Car Sales in Indonesia:

Car Brand
  2016
Jan-Feb
  2017
Jan-Feb
  Y/Y
Growth
Honda Brio   1,523   1,232 -19.1%
Nissan March    462    561 +21.4%
Daihatsu Sirion    400    240 -40.0%
Toyota Etios    837    160 -80.9%
Mitsubishi Mirage    651    167 -74.4%
Kia Picanto     49     55 +12.2%
Hyundai i10     19     14 -26.3%
Suzuki Splash    375      -      -
others      1     82      -
Total  4,317  2,511
-41.8%

Source: Gaikindo

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   86,601
February  103,278  111,824   88,740   88,208   96,722
March   95,996  113,067   99,410   94,092
April  102,257  106,124   81,600   84,770
May   99,697   96,872   79,375   88,567
June  104,268  110,614   82,172   91,488
July  112,178   91,334   55,615   61,891
August   77,964   96,652   90,537   96,282
September  115,974  102,572   93,038   92,541
October  112,039  105,222   88,408   92,106
November  111,841   91,327   86,938  100,215
December   97,706   78,802   73,264   86,573
Total 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

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