Indonesia's national car industry is expected to contribute IDR 44 trillion (USD $4 billion) to the country's total exports in 2014 through the export of completely built units (CBU), completely knock down units (CKU) and automotive spare parts. Exports of CBUs are estimated to rise more than 18 percent to 200,000 units in 2014, supported by increased domestic production capacity, according to Budi Darmadi, an official at Indonesia's Ministry of Industry. Darmadi declined to estimate exports of CKUs and spare parts this year.
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|
|Indonesia's Car Sales
(number of car units)
(number of car units)
¹ future forecast
• 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