Although it was no surprise to hear that American car manufacturer Ford Motor Company decided to exit Japan, few expected the car giant to leave Indonesia. On Monday (25/01), Ford Motor Company announced it will have closed its sales operations in Indonesia and Japan by the end of 2016. This decision came nearly one year after American multinational corporation General Motors Company (GM) decided to shut down its Chevrolet Spin production plant in Indonesia. Why do major American (and European) car manufacturers have difficulty to tap the Indonesian car market?

Read more ›

American car manufacturer Ford Motor Company decided to close all of its operations in Indonesia and Japan in 2016 due to the lack of prospects for profit in both countries. Ford spokeswoman Karen Hampton said this decision will result in the layoffs of 35 Ford staff-members in Indonesia and 292 employees in Japan. Business operations in Indonesia - which include the import of Ford and Lincoln vehicles, sales and dealerships offices - will be shut down later this year. Ford's production base in Japan will be shifted elsewhere.

Read more ›

In line with expectations and the general trend so far this year, Indonesian car sales fell 4.4 percent to 87,311 units in November 2015. In the January-November 2015 period, the country's total car sales reached 940,317 units, down 16.7 percent from car sales in the same period last year. The main cause of this weak performance is Indonesians' weakened purchasing power amid the country's economic slowdown, high inflation (in the first three quarters of the year), and low commodity prices.

Read more ›

Production of cars in Indonesia is expected to decline 15 percent (y/y) to an estimated 1.1 million vehicles in 2015, far below the target (1.6 million vehicles) set in the automotive industry roadmap desinged by the Indonesian Industry Ministry. This drop is due to the slowdown in car sales in Southeast Asia's largest economy. Slowing economic growth, which dragged down Indonesia's gross domestic product (GDP) growth to a six-year low, resulted in weakening purchasing power of Indonesian consumers.

Read more ›

On 25 October 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic subjects such as the government's fifth stimulus package, Indonesia's tourism and automotive industries, Bank Indonesia's inflation forecast, a stock & rupiah update, the latest World Bank report, commodity updates, and more.

Read more ›

In line with expectation and the historic trend, Indonesia’s car sales rose - on a monthly basis - in June 2015 ahead of the Idul Fitri celebrations (that mark the end of the Islamic holy fasting month). Car sales in Indonesia usually increase ahead of Idul Fitri (also known as Lebaran), a tradition which involves the exodus of millions of Indonesians from the cities to their places of origin. Before the journey to the villages a portion of these travelers are eager to buy a new car, a decision often influenced by promotional campaigns and discount programs.

Read more ›

Car sales in Indonesia have declined 17 percent to 443,328 units in the first five months of 2015 according to the latest data from the Indonesian Automotive Manufacturers Association (Gaikindo), hence providing further confirmation that consumer demand has continued to fall amid the country’s slowing economic growth, depreciating rupiah and accelerating inflation. Car sales are one of the key indicators to measure people’s purchasing power as well as the general state of the economy.

Read more ›

General Motors Indonesia (GM Indonesia), the local unit of the US-based General Motors Company, made a loss of about USD $200 million in the years 2013-2014 due to higher operational costs while sales did not grow accordingly. The company was unable to compete with its dominant Japanese rivals, led by Toyota Motor. These were the main reasons behind the company’s decision to close its assembly plant in Bekasi (East of Jakarta) by mid-2015 (implying the dismissal of 500 employees).

Read more ›

Indonesia’s largest listed company in terms of market capitalization and one of the country’s largest diversified conglomerates, Astra International (which is often labelled the barometer of the Indonesian economy due to the company’s presence in various sectors, from car distribution to plantations, financial services and heavy equipment) posted mixed results in 2014. Based on Astra’s latest corporate earnings report, its full-year 2014 net profit fell 1.2 percent year-on-year (y/y) to IDR 19.2 trillion (USD $1.5 billion).

Read more ›

Japanese investment in Indonesia has declined drastically in 2014 due to concern about the stability of Indonesian politics. Investment realization tumbled to USD $2.7 billion in 2014 from USD $4.7 billion in the previous year. The investment climate of Indonesia in 2014 was plagued by concern about the ‘political year’, referring to the legislative and presidential elections that were organized and the uncertainty they brought about as it was a tight race between market favorite Joko Widodo and controversial candidate Prabowo Subianto.

Read more ›

While one month ago we read (in Indonesian media) that Indonesian President Joko Widodo vowed no increase in prices of subsidized fuels before the end of 2022, the situation suddenly changed. Based on reports in Indonesian media in the second half of August 2022 there were growing signs that the government was busy preparing a significant increase in prices of subsidized fuels (involving Pertalite and Pertamax gasoline fuels as well as automotive diesel oil) to safeguard a healthy budget balance for the government.

Read more ›

At its latest monetary policy meeting, which ended on 18 February 2021, the central bank of Indonesia (Bank Indonesia) decided to cut its benchmark interest rate (BI 7-Day Reverse Repo Rate), again, by 25 basis points (bps) to 3.50 percent, touching a historically low level.

Read more ›

The automotive industry is among the hardest-hit industries amid the coronavirus (COVID-19) crisis. In May 2020, when social and business restrictions were still very strict in places like Jakarta, car sales (wholesales; from the factories to the dealers) plunged 95.8 percent year-on-year (y/y) to 3,551 cars. Meanwhile, retail car sales dropped 96.1 percent (y/y) to 17,083 vehicles in May 2020. Never before had the Association of Indonesian Automotive Manufacturers (or Gaikindo) recorded such weak car sales figures.

Read more ›

Indonesia may file a complaint at the World Trade Organization (WTO) over Vietnam's recent decision to tighten regulations related to car imports. Through Decree No. 116/2017/ND-CP on Overseas Vehicle Type Approval (VTA) (which has been in effect since 1 January 2018), Vietnam requires car exporters to obtain VTA certification first (from authorities in the exporting nation) before being allowed to export cars into Vietnam. This VTA details incoming vehicles' quality, safety and environmental protection.

Read more ›

The biggest problem for western car-makers is the dominant position of Japan in Indonesia's automotive market. Japan has been dominating the Indonesian car market since the 1970s and there are no signs that this situation will change in the short or long term.

Read more ›

After Ford Motor Indonesia, the local unit of American car manufacturer Ford Motor Company, exited Indonesia earlier this year as the company found it too difficult to compete with Japanese counterparts on the Indonesian market, Ford found a new way to make sure its components and after sales services can be delivered in Southeast Asia's largest economy.

Read more ›

The government of Indonesia eyes rapid growth of car exports in the two decades ahead. By the year 2035 the government targets to see car shipments from Indonesia rise to 1.5 million vehicles (from around 200,000 exported units in 2016). By that year, exported vehicles should contribute 37.5 percent of total Indonesian car sales.

Read more ›

A new player in Indonesia's automotive industry - backed by big carmakers from China and the USA - is eager to compete for market share in Indonesia. On Tuesday (11/07) SGMW Motor Indonesia inaugurated its first manufacturing facility in Cikarang (West Java). This local company is a joint venture between (1) SAIC Motor Corporation Ltd, a Chinese state-owned automotive design and manufacturing company headquartered in Shanghai, (2) General Motors Company (GM), a US multinational automotive corporation headquartered in Detroit, and (3) Liuzhou Wuling Automobile Industry Co Ltd, a China-based car manufacturer.

Read more ›

Indonesia's automotive industry is centered around Bekasi, Karawang and Purwakarta in West Java. In this area various big global car-makers invested in industrial estates as well as car and component manufacturing plants. Therefore, it has become the production base of Indonesia's automotive sector (including motorcycles) and can be labelled the "Detroit of Indonesia". Detroit (Michigan, USA) is the birthplace of the US automotive industry and is home to car giants General Motor, Chrysler, and Ford.

Read more ›

The decision of Indonesia's central bank (Bank Indonesia), last week, to cut its key interest rate (BI rate) by 0.25 percent to 7.00 percent and to cut the reserve-requirement ratio for commercial banks' rupiah deposits by 1 percent to 6.5 percent is a decision that should boost household consumption in Indonesia in 2016, improve people's purchasing power, give rise to a stronger automotive and property sector, and boost liquidity at local banks (hence providing room for an acceleration of credit growth in Southeast Asia's largest economy).

Read more ›