Indonesia’s 2014 Car Sales Decline amid Slowing Economic Growth
Domestic car sales in Indonesia were slightly down in 2014 compared to the previous year. Amid the slowing economy (Indonesia’s GDP growth may have fallen from 5.8 percent in 2013 to 5.1 percent in 2014) and political uncertainty (triggered by the fragmented results of the country’s legislative and presidential elections) car sales totaled 1.21 million units in 2014, down 1.8 percent from 1.23 million sold vehicles in 2013, according to the latest data from the Indonesian Automotive Industry Association (Gaikindo).
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|
|Indonesian Car Sales
(number of car units)
(number of car units)
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