In 2012, both auto production and sales in Indonesia surpassed the one-million mark for the first time ever: production increased by 27.2% y/y to 1.07 million units while sales volume went up by 24.8% to 1.12 million units. Despite a new regulation for vehicle loans introduced in June 2012, demand for automobiles has been growing, backed by the strong local economy with a GDP growth rate of over 6% for three consecutive years. It has been reported in 2012 that the Indonesian government set the auto production and sales target in 2015 at 1.6 million and 1.5　million, respectively.

 In Indonesian auto market in 2012 (excluding large commercial vehicles), Japanese OEMs gained a market share of 95.3%. Among them, Toyota Group has continued to have a share over 50% with Toyota holding the largest share of 37.1% and Daihatsu the second largest of 15.1%.

 Three-row seating multi-purpose vehicles (MPV) account for around 60% of the Indonesian auto market. Toyota Group dominates the market with the top three models of this segment: Toyota Avanza, Daihatsu Xenia, and Toyota Innova.

 Besides MPVs, the market for the affordable compact eco-cars is expected to expand, supported by the incentives of the "low cost green car (LCGC)" program which the Indonesian government is considering to introduce. Although the LCGC program is yet to be announced as of the beginning of March 2013, after its announcement has been repeatedly postponed, a number of OEMs are planning to launch new compact models.

 While Indonesia has a population of 240 million, ranking fourth in the world, and GDP per capita in the country has been growing, the car ownership rate is still low; 40 vehicles per 1,000 people. Anticipating the increase in vehicle demand, Toyota, Nissan, Honda, Suzuki, Hino and Isuzu are planning to raise the production capacities of their existing plants. Toyota, Suzuki and Hino are also planning to build new engine plants while GM is scheduled to resume production in Indonesia.

 According to LMC Automotive’s prediction on January 2013, light vehicle sales in Indonesia will increase to 1.08 million units in 2013 by 8.8% y/y, and expand to 1.48 million in 2016. However, the 2013 growth rate will go down from last year’s 24.5%. LMC Automotive pointed out that due to weak Indonesian Rupiah and the tightened loan regulations, ”sales in the coming months are likely to slow more than we currently expect. It is possible we could lower our 2013 light vehicle forecast for Indonesia.”

Related Reports:

 Toyota: Sales expansion planned for North America and Asia (Mar. 2013)
Japanese suppliers continue to expand in South East Asia (Mar. 2013)