New vehicle sales in Indonesia decreased by 16.1% year-over-year (y/y) to 1.01 million units in 2015. Sales have been stagnant because of an economic slowdown caused by lower commodity prices, higher inflation, and the weak rupiah. The Indonesian government will ease restrictions on loans and enact economic policies to revitalize consumption. In 2016, the Association of Indonesia Automotive Industries (GAIKINDO) expects that sales will recover due to factors including an effect from the government's economic policies, infrastructure development, and a lower inflation rate. If the government's GNP target of 5.3% is achieved, GAIKINDO forecasts automotive sales to increase 5% y/y (as of January). At the same time, LMC Automotives anticipates that effects from the government's measures will only show up in the medium to long term, and that 2016 light vehicle sales will drop 3.2% y/y. 

 In 2015, vehicle production in Indonesia declined by 15.4% y/y to 1.10 million units. Exports of assembled vehicles increased by 2.7% y/y to 208,000 units. In anticipation of medium- and long-term growth in Indonesia, Japanese OEMs have been building production and export hubs in the country. While annual production capacity is expected to reach around 2 million units in 2017, the goals of OEMs include striving to improve cost competitiveness through increasing local procurement and expanding exports, amidst a slump in domestic demand. Meanwhile, Ford made the decision to pull out of the Indonesian market due to uncertainty over profitability, and GM ceased local production.

 According to its forecast released in December 2015, LMC Automotives expects that Indonesian light vehicle production will decrease by 5.1% y/y to 1.02 million units in 2016. The company predicts that production will increase in 2017 and reach 1.28 million units in 2019, up 25.8% compared to 2016.