10 May 2022 (closed)
Jakarta Composite Index (6,819.79) -89.96 -1.30%
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Indonesian car sales, an important indicator to measure consumer confidence and domestic consumption, surged 24.1 percent (year-on-year) to 96,728 vehicles in August 2014. However, this growth pace is heavily influenced by public holidays and thus does not signal a marked improvement in Indonesian consumer confidence. In August last year, Indonesian car sales fell because of the limited amount of working days amid the Lebaran holiday (Idul Fitri), causing reduced production and distribution of cars and motorcycles.
In 2014, however, the influence of the Lebaran period (marking the end of the Islamic fasting month of Ramadan) was mostly felt in July, causing a steep decline of car sales (-17 percent month-to-month) in that month. A sharp fall in sales of cars and motorcycles in Indonesia is a traditional phenomenon during the Lebaran period. Usually, two weeks after the Lebaran holiday has ended, sales recover.
In the first eight months of 2014, Indonesian car sales totalled 830,398 vehicles, a five percent increase from the same period last year according to data from the Indonesian Automotive Industry Association (Gaikindo).
Forecast Indonesian Car and Motorcycle Sales in 2015
Prijono Sugiarto, President Director of Astra International, the market leader that holds the exclusive right to sell the popular Toyota brand on the Indonesian market through a jointly-controlled entity with the Toyota Motor Corporation, expects that car and motorcycle sales in 2015 will reach a similar level to this year’s sales target of 1.25 cars and 8 million motorcycles as economic growth in Indonesia will remain sluggish. Since 2011, Indonesia - Southeast Asia’s largest economy - has had to cope with a slowing economy. In the second quarter of 2014, the country’s gross domestic product (GDP) growth slowed to 5.12 percent (year-on-year), the slowest quarterly growth pace of the past 19 quarters.
The next government of Indonesia (led by president-elect Joko Widodo), which will be inaugurated on 20 October 2014, is expected to raise prices of subsidized fuels in an attempt to curb the country’s wide current account deficit. Higher fuel prices will limit demand for cars temporarily, particularly if the central bank (Bank Indonesia) will maintain its tight monetary policy (high borrowing costs are problematic for car sales). This policy is expected to remain tight to combat accelerated inflation after the possible higher subsidized fuel prices as well as to avert the impact of higher US interest rates in 2015. The US Federal Reserve is expected to raise its benchmark interest rate in the second or third quarter of 2015. This will then trigger capital outflows from emerging economies, such as Indonesia, and put pressure on the rupiah exchange rate.
Tata Motors Eyes Indonesian Market
It was reported in Indonesian newspapers that Tata Motors, a leading car manufacturer in India, aims to make Indonesia its largest car market (outside India) in the next five years. Currently, Bangladesh and South Africa are the company’s largest export markets, accounting for about 15 to 20 percent of the company’s total export volume, each. However, the company sees great potential in Indonesia as banking and incomes are developing rapidly, perhaps even surpassing Thailand as the region’s largest automotive hub.
After having established local units Tata Motors Indonesia and Tata Motors Distribusi Indonesia in 2013, the Indian car producer started selling vehicles on the Indonesian market starting from September 2013. So far, it has sold 500 vehicles only on the Indonesian market, the 3.0-liter diesel engine pickup truck being the top seller.
Indonesian Car Sales (CBU):
|Month||Sold Cars 2012||Sold Cars 2013||Sold Cars 2014|
|Indonesian Car Sales
(number of car units)
(number of car units)
¹ Gaikindo forecast