Weak Purchasing Power: Indonesian Car Sales Remain Bleak in 2015
Despite the hosting of the Gaikindo Indonesia International Auto Show 2015 (20-30 August 2015), Indonesian car sales continued to shrank in August due to people’s weaker purchasing power amid the country’s economic slowdown. In August a total of 90,077 cars were sold in Southeast Asia’s largest economy, down 6.9 percent from the same month last year, according to the latest data from the Indonesian Automotive Industry Association (Gaikindo).
Combined, in the first eight months of 2015 Indonesian car sales stood at 671,183 vehicles, down nearly 20 percent from the same period last year, indicating a sharp slowdown in the country’s car industry. People’s purchasing power has declined due to the country’s slowing economic growth (in the second quarter of 2015 Indonesia’s GDP growth slowed to a six-year low) and high inflation. The weak rupiah, which has depreciated nearly 15 percent against the US dollar so far in 2015, causes imported inflation (as many car components still need to be imported) hence making cars more expensive in Indonesia. Indonesia’s economic slowdown is partly caused by weak commodity markets. Low prices of palm oil, coal and other commodities cause sluggish car sales in the country’s mining and plantation regions on the islands of Sumatra and Kalimantan.
Gaikindo Deputy Chairman Yohannes Nangoi stated that the nation’s car sales will continue to decline if commodity prices remain low. Gaikindo already cut its forecast for Indonesian car sales in 2015 twice from an initial 1.2 million cars to 1.1 million, and then to the range of 950 thousand - 1 million.
Car sales are a key indicator for the economy as it provides valuable information about consumer confidence and purchasing power. Declining car sales are therefore a bad sign for the economy, particularly given Indonesia's still low per capita car ownership ratio (less than four percent of the population owns a vehicle).
Indonesian Car Sales (CBU):
|Month||Sold Cars 2012||Sold Cars 2013||Sold Cars 2014||Sold Cars 2015|