While Thailand only counted 871,650 domestic car sales in full-year 2017, the nation manufactured a total of 1,988,823 vehicles in the same year. This implies that the majority of Thai cars is shipped abroad. And this is exactly where Indonesia needs to do its homework in order to challenge Thailand's leading position as ASEAN biggest car manufacturer. Currently, Indonesian car exports are only around 200,000 per year, implying about one-sixth of the nation's total production is shipped to overseas markets.

One key bottleneck in terms of car exports is that Indonesia's car shipments can currently only reach developing nations, such as its peers in the Southeast Asian region, South America and Africa, as well as the Middle East. The reason being that these countries share low safety and gas emission standards.

While several advanced nations already started to use the Euro-2 standard back in 1997, Indonesia only followed suit in 2003. And while advanced nations started to comply with the Euro-4 standard since 2005, Indonesia is barely ready to introduce it in 2018. Another obstacle is that Indonesia - contrary to Thailand - lacks a well developed car component industry.

Jongkie Sugiarto, Chairman of the Indonesian Automotive Industry Association (Gaikindo), said there are five key points that determine the competitiveness of a nation's automotive manufacturing industry: (1) infrastructure, (2) technology, (3) costs and productivity, (4) human resources, and (5) the electricity supply. Sugiarto added that Indonesia lags behind in all these areas with the exception of low labor costs and productivity (number 3). Hence, the only reason why Indonesia has a +1 million car production figure is because of the enormous size of its population. The low number of car exports is evidence that the nation lags behind in terms of infrastructure, technology, quality human resources, and the electricity supply.

It is a good sign, however, that Indonesia's domestic car sales have remained above the one million units per year despite the prolonged period of slowing economic growth and bleak purchasing power.

While domestic car sales in Indonesia have only risen 4.86 percent year-on-year (y/y) to 190,236 in the January-February 2018 period, car imports into Indonesia have surged at a much more impressive pace. In the first two months of 2018 a total of 15,237 completely built up vehicles (CBU) were imported into Indonesia, up 31.06 percent (y/y) from CBU imports in the same period one year earlier.

Car Sales in ASEAN:

Country    2016    2017   Y/Y
 768,788  871,650  +13%
Indonesia 1,062,716 1,079,534   +2%
Malaysia  580,124  576,635   -1%
Philippines  359,572  425,673  +18%
Vietnam  270,820  250,619   -7%
Singapore  110,455  116,148   +5%
Brunei   13,248   11,209  -15%
Myanmar    4,168    8,225  +97%
ASEAN 3,168,871 3,339,693   +5%

Car Production in ASEAN:

Country    2016    2017   Y/Y
1,944,417 1,988,823   +2%
Indonesia 1,177,797 1,216,615   +3%
Malaysia  545,253  499,639   -8%
Philippines  116,868  141,252  +21%
Vietnam  236,161  195,197  -17%
Myanmar    1,152    4,930 +328%
ASEAN 4,020,496 4,041,526   +1%

Source: ASEAN Automotive Federation