The main reasons for this huge decline in car sales across Indonesia are the business restrictions (causing most dealers to close their doors), people’s preference to stay at home to avoid contracting COVID-19, and the fact that services related to vehicle registration certificates (in Indonesia known as STNK) were temporarily shut down. Moreover, the Indonesia Financial Service Association (APPI) said in April and May 2020 members did not disburse credit for the purchase of cars (this is important as an estimated 75 percent of car sales involve credit from a lender).

In June 2020 there occurred a small rebound, in line with the easing of self-imposed social and business restrictions. Wholesale car sales across Indonesia rose to 12,623 units in June 2020 from 3,551 in the preceding month.

Despite rebounding car sales in June 2020, the number remained far from ‘normal’ levels (which would be an average of around 80,000 - 90,000 vehicles being sold per month). And, it is quite likely that car sales will not reach normal numbers in the remainder of 2020 as COVID-19 related uncertainty continues to lurk about. That is also why we feel Gaikindo’s revised outlook for 600,000 sold cars in full-year 2020 is too optimistic. A number around 450,000 vehicles seems more realistic to us at this moment.

In the remainder of this analysis we focus on Indonesia’s automotive industry, and the electric car in particular.

[...]

Read the full article in the July 2020 edition of our monthly report. Order the report by sending an email to info@indonesia-investments.com or message to +62(0)8.788.410.6944 (incl. WhatsApp).

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