Indonesian Demand for Imported CBU Cars still Strong
Despite the country's high import tariffs and the high luxury goods tax, there remains strong demand for imports of completely built up (CBU) cars in Indonesia. As the Indonesian government is eager to limit imports of consumer goods, it set an average import tariff of 45 percent on CBU cars. Besides this import tariff the imported CBU car is also subject to Indonesia's luxury goods tax at 20 percent. However, these high taxes have done little to curtail imports of CBU cars. The real reason why some foreign-branded imported CBU cars see declining sales in Indonesia is due to weaker purchasing power.
The most popular imported CBU car into Indonesia is the Mazda, manufactured by the Japan-based Mazda Motor Corporation. In full-year 2015 there were a total of 9,334 imported Mazda vehicles, up slightly from 9,230 imported units in the preceding year. While domestic car sales in Indonesia fell in 2015 due to weaker purchasing power amid slowing economic growth and the weak rupiah rate (against the US dollar), imports of Mazda did not follow that trend. Therefore, Astrid Ariani Wijana, Senior Marketing Manager at Mazda Motor Indonesia, said the company remains optimistic about the potential of the Indonesian car market (without feeling the need to manufacture their Mazda vehicles domestically).
Mukiat Sutikno, President Director at Hyundai Mobil Indonesia, said the import tariffs and luxury goods sales tax are not so much the problem. He is more concerned about harmonious relations within Indonesia's industry sector, particularly the frequently staged demonstrations by workers requesting for higher wages. Higher minimum wages will give rise to fewer imports of completely knocked down (CKD) units (import tariffs for CKD parts are much lower) according to Sutikno. Although Hyundai has a factory in Bekasi (West Java) the company still imports CBU cars into Southeast Asia's largest economy.
Further Reading: Analysis & Overview of Indonesia's Automotive Industry
Jongkie Sugiarto, Chairman of the Indonesian Automotive Industry Association (Gaikindo), said imports of CBU cars is a strategy of car manufacturers that should be allowed by the Indonesian government. This strategy is conducted because domestic sales of (and demand for) the specific vehicle is low and therefore the vehicle is not manufactured in Indonesia. If these vehicles were to become very popular than the manufacturer would surely open a local manufacturing plant in Indonesia because that would be a more profitable business model.
Sales of Imported CBU Cars in Indonesia in 2015:
| Car Brand |
Sold Units in 2015 |
| Mazda | 9,334 |
| Ford | 6,103 |
| Mercedes Benz | 3,863 |
| BMW | 2,700 |
| KIA | 2,217 |
| Toyota Alphard | 2,018 |
| Hyundai | 1,636 |
| Lexus | 648 |
| Volkswagen | 605 |
Source: Gaikindo
Indonesian Car Sales (CBU):
| Month | Sold Cars 2012 |
Sold Cars 2013 |
Sold Cars 2014 |
Sold Cars 2015 |
Sold Cars 2016 |
| January | 76,427 | 96,718 | 103,609 | 94,194 | 84,885 |
| February | 86,486 | 103,278 | 111,824 | 88,740 | |
| March | 87,917 | 95,996 | 113,067 | 99,410 | |
| April | 87,144 | 102,257 | 106,124 | 81,600 | |
| May | 95,541 | 99,697 | 96,872 | 79,375 | |
| June | 101,746 | 104,268 | 110,614 | 82,172 | |
| July | 102,511 | 112,178 | 91,334 | 55,615 | |
| August | 76,445 | 77,964 | 96,652 | 90,537 | |
| September | 102,100 | 115,974 | 102,572 | 93,038 | |
| October | 106,754 | 112,039 | 105,222 | 88,408 | |
| November | 103,703 | 111,841 | 91,327 | 86,938 | |
| December | 89,456 | 97,706 | 78,802 | 73,264 | |
| Total | 1,116,230 |
1,229,916 |
1,208,019 | 1,013,291 |
Source: Gaikindo
Indonesian Car Sales & Car Exports:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Car Sales (car units) |
607,805 | 486,061 | 764,710 | 894,164 | 1,116,230 |
1,229,916 | 1,208,019 | 1,013,291 |
| Car Exports (car units) |
100,982 | 56,669 | 85,769 | 107,932 | 173,368 | 170,907 | 202,273 | 207,691 |
Source: Gaikindo