With the rising trend in Indonesia of consumers swapping their motorcycles for four-wheeled vehicles, its auto sales have grown by 25% to break records in 2012. It’s also on track to continue gaining strength this year. Sales are expected to increase due to steep increases in wages and low interest rates. Annual sales increased to 1.1 million vehicles despite the stricter downpayment requirements. For the month of December, sales had increased by 11.4% compared to the previous year. High auto sales, a key indicator of domestic consumer spending, have marked an excellent year for Indonesia (the biggest economy in Southeast Asia). However, the weakness in worldwide demand for commodities is considered a bad point against the economic performance of the country.
But then, automakers are working to produce less expensive cars for the home market with the newest products from Toyota Motor Corp and Daihatsu Motor Co Ltd being priced at lower than $10,000 to go up against models from Nissan Motor Co and Tata Motors Ltd. Sales are expected to continue to be high. According to Bahana Securities, there will be an 18% growth in 2013 and 2014 but others have said that the rate of growth in 2013 may slow down because of regulatory efforts.
Adrian Joezer, an auto analyst at Mandiri Sekuritas, anticipates that there will be a 10% growth this year. He cited the risk of a decline due to regulations as the provincial government in Jakarta wants to resolve congestion. The Indonesia Automotive Industry Association predicts that in 2013, about 1.1 million vehicles will be sold. Sudirman Maman Rusdi, chairman of the association, informed Reuters that for this year, there continues to be obstacles like government downpayment regulations and low commodity export prices. Toyota, the industry leader, dominated sales in 2012 with 406,026 vehicles, making up 36% market share. The change to autos has had an impact on motorbike sales, which decreased by 12% last year to 7 million.