The fact that so many countries purchase Indonesian automotive products is evidence of the country's high quality products according to the trade minister. This is a positive context to enhance Indonesia’s role on the global automotive industry toward the future, thus becoming an important global production hub.

Indonesia-based Toyota Motor Manufacturing Indonesia has recorded remarkable export growth in the past four years from 55,796 units in 2010 to 118,436 units in 2013 (a 112.3 percentage growth increase). This growth has continued into 2014. In the first five months of the year (January to May), the company has already exported 53,064 car units. President Director of Toyota Motor Manufacturing Indonesia, Masahiro Nonami, targets a 30 percentage point growth of the company’s car exports in 2014. This export growth is particularly supported by increased exports of the Toyota Vios (a four-door subcompact sedan) to the Middle East.

Indonesia’s Automotive Industry

The automotive industry has become an important pillar of the manufacturing sector in Indonesia as many of the world’s well-known car corporations have (re)opened manufacturing plants in Southeast Asia’s largest economy. Moreover, amid continued robust economic growth, domestic car sales in Indonesia have hit record highs in recent years, while car ownership in Indonesia remains relatively low and thus the growth potential remains high. Research firm Frost and Sullivan recently reported that Indonesian car ownership stands at 80 vehicles per 1,000 people (compared to over 800 per 1,000 people in the USA).

As such, Indonesia has experienced a remarkable transition, evolving from a merely export oriented car production hub (especially for the Southeast Asian region) into a major (domestic) sales market. Therefore, global carmakers (including Toyota and General Motors) decided to invest heavily to increase local production capacity in recent years. Currently, Japanese car manufacturers still dominate Indonesia’s car market. Over half of total domestic car sales are Toyota cars.

Growth of Indonesia's car industry has been supported by the introduction of the low cost green car (LCGC) in late 2013. These cars, which have a price tag of less than IDR 100 million (USD $8,403), have proved popular. The Indonesian government offered tax incentives to LCGC producers that meet the requirements of fuel efficiency targets as it aims to turn Indonesia into the regional hub for LCGCs ahead of the start of the ASEAN Economic Community in 2015, which seeks to turn ASEAN into a single market and production base.

Indonesian Car Sales (completely built up/CBU units):

 Month    Sold Cars 2012    Sold Cars 2013    Sold Cars 2014
 January           76,427           96,718          103,595
 February           86,486          103,279          111,551
 March           87,917           95,996          113,079
 April           87,144          102,257          106,811
 May           95,541           99,697           98,198
 June          101,746          104,268  
 July          102,511          112,178  
 August           76,445           77,964  
 September          102,100          115,973  
 October          106,754          112,039  
 November          103,703          111,841  
 December           89,456           97,694  
 Total         1,116,230

     2008    2009    2010    2011     2012     2013     2014¹
Indonesia's Car Sales
(number of car units)
 607,805  486,061  764,710  894,164 1,116,230
1,229,904 1,250,000
Indonesia's Exports
(number of car units)
 100,982   56,669   85,769  107,932  173,368  170,907  200,000

¹ future forecast
Source: Gaikindo