Despite a general weaker domestic economic environment amid higher interest rates (Indonesia's central bank raised its benchmark interest rate by 175 basis points to 7.50 percent between June and November 2013) and higher inflation (8.32 percent year-on-year in October 2013), which both curtail people's purchasing power, Indonesian car sales are still expected to increase in 2014 due to the recent entrance of the more fuel-efficient LCGC. These cars can be sold cheaper on the Indonesian market due to generous government tax incentives.

In October 2013, the LCGC segment's contribution to total car sales in Indonesia increased 10.6 percent from the previous month, while the contribution share of the traditionally popular multi purpose vehicle (MPV) toward the October sales figure declined from 34 percent to 27 percent. Therefore, although only introduced on the Indonesian market in September 2013, the LCGC has already proven its popularity and is expected to enlarge its contribution share toward total car sales in 2014.

Car Sales Indonesia:

     2008    2009    2010    2011     2012     2013¹     2014¹
Indonesia's Car Sales
(number of car units)
 607,805  486,061  764,710  894,164 1,116,230
1,200,000 1,300,000

¹ indicates a forecast
Source: Gaikindo