Indonesia: Market size recovers to a level of 1.1 million vehicles, local production advances

OEMs expanding lineup of MPVs, Mitsubishi Motors' and Wuling's new plants come on stream



  In 2016, Indonesia saw a year-over-year (y/y) increase of 7.2% in vehicles manufactured to 1.178 million units, while sales grew by 4.9% to 1.063 million units. Vehicle sales have recovered for the first time in three years thanks to an economic stimulus package. The Association of Indonesian Automotive Industries (GAIKINDO) predicts that vehicle sales for 2017 will reach 1.1 million units (y/y increase of 3.5%). LMC Automotive anticipates that the number of vehicles produced in 2020 will reach 1.3 million vehicles.

  Due to cultural tendencies in Indonesia for large families, there is strong demand for high passenger capacity MPVs, which comprise roughly 40% of all new vehicle sales (including commercial vehicles). In recent years, SUV sales have also increased, with OEMs releasing crossover models featuring the sporty aesthetics and performance of SUVs while also including the large interior space and various features of MPVs. Additionally, the market size for low cost green cars (LCGCs), first introduced in 2013, has grown to exceed 200,000 vehicles, with Toyota/Daihatsu releasing a second LCGC model in August 2016 in the form of a compact MPV.

  Japanese OEMs control over 90% of Indonesia's new vehicle market. The Toyota Group, which accounts for a majority of the market, plans to promote the development and production of Indonesia-exclusive models primarily through Daihatsu, and aims to further secure its market dominance by expanding upon its MPV lineup.

  Mitsubishi Motors' and SAIC-GM-Wuling's new plants came on stream in 2017. At the Indonesian International Motor Show held in August, both automakers showcased new MPVs produced at their new plants, which garnered attention due to the possibility of influencing future market trends.

  Indonesia is a market with high potential, due in part to its burgeoning population of 250 million. Each automaker is currently in the midst of expanding local production structures in anticipation of mid to long-term increases in domestic demand. Key issues to consider for the future are revisions to the luxury tax that would promote exportation of domestically produced vehicles, as well as the establishment of emissions and safety standards.

Source: Created by MarkLines based on GAIKINDO's data

Related Reports:
Nissan takes 34% controlling stake in Mitsubishi Motors (Aug. 2016)
Toyota to make Daihatsu a 100% subsidiary; entrusts A-segment development (Mar. 2016)
Indonesia: economic stimulus measures may boost sales in H2 2016 (Mar. 2016)

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