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):

Month Sold Cars
Sold Cars
Sold Cars
Sold Cars
Sold Cars
January   96,718  103,609   94,194   85,002   86,324
February  103,278  111,824   88,740   88,208   95,159
March   95,996  113,067   99,410   94,092  102,336
April  102,257  106,124   81,600   84,770   89,623
May   99,697   96,872   79,375   88,567   94,091
June  104,268  110,614   82,172   91,488   66,370
July  112,178   91,334   55,615   61,891   84,905
August   77,964   96,652   90,537   96,282   96,466
September  115,974  102,572   93,038   92,541   87,645
October  112,039  105,222   88,408   92,106   94,461
November  111,841   91,327   86,938  100,365
December   97,706   78,802   73,264   86,547
Total 1,229,916
1,208,019 1,013,291 1,061,859

Source: Gaikindo