Indonesia is both Southeast Asia's largest economy and the largest car market. With per capita car ownership of Indonesia relatively low (it is estimated that less than eight percent of the Indonesian population owns a car), having a young and large population (implying many first-time car buyers are to come) and growing per capita GDP, Indonesia should be a very attractive market for any car manufacturer.

Regarding per capita GDP, Indonesia hit the USD $3,000 mark in 2010. Generally, this level is considered an important threshold as it tends to result in accelerated growth in a number of sectors including the automotive industry. Others put this threshold at USD $5,000 (per capita GDP) for consumer spending on large items (including cars) to start rising strongly. Provided economic growth of Indonesia will accelerate in the years to come the nation can hit the USD $5,000 per capita GDP threshold within five years.

After a dip in 2009 (caused by the impact of the global financial crisis), Indonesia's domestic car sales rose rapidly from 764,710 vehicles in 2010 to 1.2 million vehicles in 2013, before stagnating in 2014 (again recording 1.2 million sold units) and then falling to 1.0 million vehicles in 2015.

Read Analysis: Why Have Indonesia's Car Sales Declined after 2014?

Despite relatively weak car sales since 2014, there is still ample room for growth in the years ahead provided the country's economic growth accelerates. Many believe that the year 2016 is the year that will finally show an acceleration of economic growth after five years of slowing economic growth. Indonesia's GDP growth is expected to reach 5.3 percent (y/y) in 2016 from an estimated 4.7 percent (y/y) last year.

However, the main disadvantage for American and European car manufacturers is that Indonesia's car market is dominated by Japanese automakers. For example, in 2015 a total of 1,013,291 vehicles were sold on the Indonesian market. However, 928,317 vehicles were Japanese branded cars (with especially Toyota dominating sales in Indonesia), leaving very little for non-Japanese brands such as GM and Ford. The table below shows the declining trend of Ford's sales in Indonesia over the past five years hence causing the company's reduced profitability.

 Car Sales Ford Motor Company in Indonesia

Year Sold Car Units
2015        4,986
2014       12,008
2013        9,907
2012       11,958
2011       15.670

Source: Gaikindo

Indonesian Car Sales (CBU):

 Month    Sold Cars 2012    Sold Cars 2013    Sold Cars 2014    Sold Cars 2015
 January           76,427           96,718          103,609           94,194
 February           86,486          103,278          111,824           88,740
 March           87,917           95,996          113,067           99,410
 April           87,144          102,257          106,124           81,600
 May           95,541           99,697           96,872           79,375
 June          101,746          104,268          110,614           82,172
 July          102,511          112,178           91,334           55,615
 August           76,445           77,964           96,652           90,537
 September          102,100          115,974          102,572           93,038
 October          106,754          112,039          105,222           88,408
 November          103,703          111,841           91,327           86,938
 December           89,456           97,706           78,802           73,264
 Total         1,116,230
        1,229,916
        1,208,019         1,013,291

 

     2008    2009    2010    2011     2012     2013     2014     2015
Car Sales
(car units)
 607,805  486,061  764,710  894,164 1,116,230
1,229,916 1,208,019 1,013,291
Car Exports
(units)
 100,982   56,669   85,769  107,932  173,368  170,907  202,273  207,691

 

Brand      2014      2015     YoY
Growth (%)
Toyota (Astra)   399,746   322,466    -19.3
Daihatsu (Astra)   185,226   167,808     -9.4
Honda   159,147   159,253    +0.06
Suzuki   154,923   121,805    -21.4
Mitsubishi   141,962   112,527    -20.7
Nissan    33,789    25,108    -25.7
Isuzu (Astra)    28,278    19,350    -31.5
UD Trucks (Astra)      854      560    -34.4
Peugeot (Astra)       65       40    -38.5
Others   104,029    84,374    -18.9
Total 1,208,019 1,013,291    -16.1

Source: Astra International

Bahas

Lars Christiansen |

The article asks a question, but does not provide an answer; That Japanese car makers dominate the market is not the answer, but an effect of SOMETHING. Hence, it would show real journalistic skill if the author of the article tried to answer his own question - WHY do Japanese carmakers dominate the market to MONOPOLY degree ? Does Japan have preferential tax exemptions, and what are the reasons for such, what are the benefits for Indonesia of such, and what is the downside of such ?

Journalist; Dont just convey information, - but background and intelligent analysis please !