In 2013, Indonesian car manufacturers produced a total of 1.2 million cars (a 20 percent growth from the previous year) and sold 1.22 million cars (a 10 percent increase from 2012). The Ministry of Industry expects that car sales will grow a further eight percent in 2014 to 1.3 million units. Thus, the Ministry of Industry has a more optimistic outlook than the Association of Indonesian Automotive Manufacturers (Gaikindo), which recently stated to expect 1.2 million sold cars in Indonesia this year. Meanwhile, the country's total production capacity may grow to 1.8 million by 2015.

Despite the slowing economy, higher inflation (which reduces people's purchasing power), a reduction of fuel subsidies, and a higher interest rate policy of the central bank, Indonesian car sales continue to rise. This rising trend is caused by the popularity of the new low cost green car (LCGC). Indonesia's LCGC program commenced in 2013. Through tax incentives, the Indonesian government attracted car manufacturers that meet requirements of fuel efficiency targets to produce the LCGC in Indonesia. The government aims to make the country the regional hub for LCGCs ahead of the start of the ASEAN Economic Community in 2015 (which will turn the ASEAN region into one single market and production base). The LCGC is also regarded as a solution to curtail Indonesia's subsidized fuel consumption. For the government it is important to reduce the import of expensive oil in order to reduce the country's current account deficit which is partly to blame for the sharply depreciated rupiah exchange rate in 2013. With a price tag of only around IDR 100 million (USD $8,547), these LCGCs are significantly cheaper than other cars. It is claimed that Indonesia's LCGC program has attracted investments worth of USD $6.5 billion. The five principal brands that participate in this program are Toyota, Daihatsu, Honda, Nissan and Suzuki.

The Indonesian government has ambitious plans for the domestic car industry. Recently, Minister of Industry MS Hidayat said that he would like to see all major global car manufacturers to select Indonesia as their production base. Hidayat added that within five years, all spare parts should be domestically-produced instead of imported. Currently, Astra International's Toyota Agya and Daihatsu Ayla - both being LCGCs - consist for 88 percent of domestically-produced components. 

Meanwhile, Indonesia imported 154,000 cars in 2013. With car exports at 170,907 in the same year, Indonesia thus had a car trade surplus of almost 17,000 units. In the next five years, the government targets that at least 30 percent of Indonesia's total LCGCs production should be exported.

Frost & Sullivan expect Indonesian LCGC sales to grow 125 percent to 125,000 in 2014 from 51,000 last year.

Indonesian Car Sales (CBU):

 Month    Sold Cars 2012    Sold Cars 2013    Sold Cars 2014
 January           76,427           96,718          107,496
 February           86,486          103,279  
 March           87,917           95,996  
 April           87,144          102,257  
 May           95,541           99,697  
 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
        1,229,904
 

 

     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 1,300,000
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

Further Reading:

Car Sales in Indonesia Unaffected by Weather Conditions in January 2014
Expansion of Indonesia's Automotive Industry: Raising Exports to Asia
Car Sales in Indonesia Expected to Rise in 2014 amid Political Elections
Popular Low Cost Green Car Boosts Indonesian Car Sales in 2013
Gaikindo Targets 10% Car Sales Growth in Indonesia for 2014

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