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30 July 2021 (closed)
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The Association of Indonesian Automotive Industries (Gaikindo) lowered its forecast for car sales in Indonesia in full-year 2017. Initially Gaikindo expected to see 1.1 million car sales in Indonesia this year. However, the target has now been revised to 1.06 million units. The revision was particularly attributed to weak sales within the (lower) middle class segment.
Jongkie Sugiarto, Chairman of Gaikindo, said the Indonesian economy has not shown significant acceleration in 2017 and therefore consumers' purchasing power has not improved markedly. Instead, analysts believe that Indonesians currently prefer to save their money on bank accounts (hence third-party funds in Indonesia's banking system have been rising rapidly).
But it is interesting to note that sales growth of the more expensive types of cars is higher than than sales growth of those vehicles that are more affordable. This indicates that the richer segments of Indonesian society are less affected by stagnant economic growth.
So far this year (January-October 2017), a total of 898,218 cars were sold in Indonesia, the largest car market in Southeast Asia. This is only a modest 2.5 percent (y/y) increase from the nation's car sales figure in the same period one year earlier.
Fransiscus Soerjopranoto, Executive General Manager at Toyota Astra Motor (TAM), said the automotive industry of Indonesia remains challenging. When retail sales turned out weak around the Idul Fitri period earlier this year (when there usually occurs a marked increase in retail sales), car-makers in Indonesia started to revise down their sales targets for full-year 2017 car sales.
Besides cautious consumers, Soerjopranoto added that tighter policies surrounding car credit is also a reason why we see bleak car sales growth in 2017. Due to rising non-performing loan ratios at financial institutions, they have become more careful when disbursing credit to consumers, especially for those cars that are priced below IDR 200 million (approx. USD $15,000). This therefore involves the more affordable deals. Soerjopranoto says the majority of car sales in Indonesia involve deals that are priced below IDR 200 million (for example the popular low cost green car, LCGC).
Indonesian Car Sales (CBU):