Indonesian vehicle sales in 2015 forecast to remain flat at 1.2 million units

Mitsubishi to build plant; GM to close Bekasi Plant and open new JV plant with SAIC



Vehicle production and sales in Indonesia In Indonesia, new vehicle sales in 2014 fell to 1.21 million units, down 1.8% from the previous year. Although the country overtook Thailand as the largest auto market in Southeast Asia, its sales were less than last year for the first time in five years due to stagnant economic growth, rupiah's depreciation, high interest rate, and reduced fuel subsidies. Sales of Low Cost Green Car (LCGC)-certified vehicles were strong at 170,000 units while those of the all other segments including the leading multi-purpose vehicles (MPVs) dropped. GAIKINDO forecasts that 2015 sales are expected to remain the same as the 2014 level at 1.2 million units (as of January 2015).

 According to LMC Automotive's medium- and long-term outlook, Indonesia has the highest sales growth potential in Southeast Asia due to its large, growing, and young population, with a fast expanding middle class. Although the country saw stagnant sales in 2014, LMCA forecasts that Indonesian sales are expected to increase by 7 to 9% year-on-year from 2015 to 2018 and will rise to 1,575,165 units in 2018.

 The new Indonesian administration formed in October 2014 will continue the LCGC program that the former administration had introduced. Since the ASEAN Economic Community officially begins in 2015, the government intends to promote domestic automotive industry and expand vehicle exports. As for the fuel subsidy system which was a burden for the government's budget, the new administration reformed the subsidy system to fulfill the election pledge. Effective as of January 2015, the subsidy for gasoline was eliminated while that for diesel was fixed.

 Vehicle production in Indonesia in 2014 increased to a record high of 1.3 million units, up 7.5% from the previous year. Exports of completely built-up vehicles grew by 18.4% year-on-year to 204,000 units. In anticipation of medium- and long-term growth in Indonesia and surrounding countries, a number of automakers are accelerating their moves to make Indonesia a production and export hub in the region. Toyota plans to start operations at a new engine plant in 2016 while Daihatsu is enhancing its development function in Indonesia. Suzuki and Mitsubishi are expected to begin production at new plants in 2015 and 2017, respectively. Among non-Japanese OEMs, GM revealed a plan to build a new joint venture plant together with SAIC Motor (GM also intends to close its existing plant in June 2015). VW is considering construction of a new plant.

Related Reports:
Japanese suppliers in Indonesia: New entries and capacity enhancements (Jun. 2014)