After China, it may be Indonesia that would be the next growth market. Indonesia has the biggest population and economy in Southeast Asia but its ratio of car ownership is one of the lowest in the area. The factors that make analysts at IHS Automotive and JPMorgan Chase & Co. think that this country is prepared to flourish are its increasing incomes, urbanization and the government’s support in driving demand for low-emission vehicles.
Jessada Thongpak, a senior analyst for Southeast Asia at IHS Automotive, believes that the auto market of Indonesia is on the brink of a “boom” as automakers are directing their attention here because of its high growth potential as well as its stable inflation and interest rates.
General Motors Co. and Tata Motors Ltd. are included in the list of automakers that are preparing to go up against Japanese automakers headed by Toyota Motor Corp., which control over 90% of a market that has the world’s fourth-largest population. Auto sales in Indonesia are estimated to increase by over 50% in five years as the expanding working class is asking for minivans and compact cars.
GM wants to put up a minivan plant in Indonesia. Its minivan stopped production six years ago. Meanwhile, Ford Motor Co. has said that Indonesia has “great potential.” Tata Motors is hoping to compete with the Japanese carmakers.
In its web site, Tata pointed out that it has an assembly plant in Samutprakan, near Bangkok, that produces pickups. There’s still a lot of room for the auto market in Indonesia to grow. From CLSA Asia-Pacific Markets estimates, we know that Indonesia has 32 vehicles for every 1,000 people in 2010. This is significantly lower compared to Thailand’s 123 and Malaysia’s 300. Furthermore, the economy and population of Indonesia are higher than when these two countries are combined.