Jongkie Sugiarto, Gaikindo Deputy Chairman, confirmed that Indonesian car sales had fallen in 2014 due to slowing economic growth. This slowing growth is partly self-inflicted as the government and central bank decided to safeguard the country’s financial and fiscal stability instead of seeking higher GDP growth. The central bank of Indonesia (Bank Indonesia) raised its key interest rate gradually, yet aggressively between June 2013 and November 2014 (from 5.75 percent to 7.75 percent) in an effort to combat sharply accelerated inflation (caused by higher prices of subsidized fuels) as well as to curb the country’s wide current account deficit. Accelerated inflation and the higher interest rate environment have weakened people’s purchasing power and car sales declined accordingly.

Meanwhile, sharp rupiah depreciation against the US dollar - starting from mid-2013 (due to the winding down of the US quantitative easing program and looming higher US interest rates) also impacted negatively on Indonesian car sales as most car components are imported in US dollars.

Astra International, the clear market leader in terms of domestic car sales, saw its market share decline from 53 percent in 2013 to 51 percent in 2014 due to increased competition in Indonesia’s car industry (resulting in the company’s six percent decline in car sales). Through a jointly-controlled entity with the Toyota Motor Corporation, Astra holds the exclusive right to sell Toyota vehicles on the Indonesian market. The Toyota brand is the most popular car in Indonesia. In 2014, a total of 399,746 Toyota vehicles were sold in Southeast Asia’s largest economy, which is about one-third of all domestically sold vehicles. Apart from Toyota, Astra International also sells Daihatsu, Isuzu cars as well as UD Trucks.

Most international and domestic institutions expect to see an improvement in Indonesia’s economic growth in 2015 and therefore car sales should also improve in 2015.

Indonesian Car Sales (CBU):

 Month    Sold Cars 2012    Sold Cars 2013    Sold Cars 2014
 January           76,427           96,718          103,609
 February           86,486          103,278          111,824
 March           87,917           95,996          113,067
 April           87,144          102,257          106,124
 May           95,541           99,697           96,872
 June          101,746          104,268          110,614
 July          102,511          112,178           91,334
 August           76,445           77,964           96,652
 September          102,100          115,974          102,572
 October          106,754          112,039          105,222
 November          103,703          111,841           91,327
 December           89,456           97,706           78,802
 Total         1,116,230


     2008    2009    2010    2011     2012     2013     2014
Indonesian Car Sales
(number of car units)
 607,805  486,061  764,710  894,164 1,116,230
1,229,916 1,208,019
Indonesian Exports
(number of car units)
 100,982   56,669   85,769  107,932  173,368  170,907  

Source: Gaikindo

Further Reading:

Indonesia's 2014 Annual Car Sales Fall on Bleak Economy & Fuel Hike
Low Cost Green Cars Support Car Sales in Indonesia
Growth of Indonesian Car Sales Falls amid Slowing Economic Expansion
Impact of Higher Subsidized Fuel Prices on Indonesia’s Car Industry