Car Sales in Indonesia Unaffected by Weather Conditions in January 2014

The government has been eager to develop this LCGC industry in Indonesia as the green vehicles (which are more environmentally friendly) will somewhat curb Indonesians' demand for (subsidized) fuels. Due to declining domestic oil output, Indonesia needs to import an ever-increasing amount of expensive oil, putting serious pressure on the country's trade balance (as well as on the rupiah exchange rate). The LCGCs, having a price tag of around IDR 100 million (roughly USD $8,000), proved to be popular on the Indonesian market. The five principal Japanese companies that entered Indonesia's LCGC industry are Toyota, Daihatsu, Honda, Suzuki and Nissan.

Indonesia's Ministry of Industry expects that LCGC sales will account for about 10 to 15 percent of total car sales in Indonesia in 2014. Total car sales this year are expected to hit another record high at around 1.3 million. In the last four years, Indonesia's car sales have hit a new record year after year (see table below).

Bad weather conditions in January 2014 were not able to prevent a surge in total car sales. In the first month of the year - amid the peak in the rainy season - severe floods and high waves at sea disrupted the distribution networks of factories and car dealers. Toyota Astra Motor (TAM), however, said that these weather conditions caused a decline in January car sales. President Director of TAM, Johnny Darmawan, stated that car sales usually show a surge prior to Imlek (Chinese New Year) on 31 January 2014. In January this year, however, the company's car sales declined.

In 2014, car sales are expected to continue to increase even though various negative sentiments linger on. The rupiah exchange rate, which fell more than 21 percent against the US dollar in 2013, makes the import of car components more expensive. As a response car dealers increase prices. Moreover, Indonesia has seen a higher interest rate environment since mid-2013 when (between June and November 2013) the central bank gradually raised its benchmark interest rate from 5.75 percent to 7.50 percent in order to combat high inflation and support the ailing rupiah.

Although continuous rising car sales is an important indicator of economic growth (particularly Indonesia's per capita GDP is growing strongly), the massive influx of cars on Indonesian roads burdens the - already weak state of - infrastructure.

Indonesian Car Sales:

Month	Sold Cars 2012	Sold Cars 2013	Sold Cars 2014
January	76,427	96,718	107,496
February	86,486	103,279
March	87,917	95,996
April	87,144	102,257
May	95,541	99,697
June	101,746	104,268
July	102,511	112,178
August	76,445	77,964
September	102,100	115,973
October	106,754	112,039
November	103,703	111,841
December	89,456	97,694
Total	1,116,230	1,229,904

 

	2008	2009	2010	2011	2012	2013	2014¹
Indonesia's Car Sales (number of car units)	607,805	486,061	764,710	894,164	1,116,230	1,229,904	1,300,000
Indonesia's Exports (number of car units)	100,982	56,669	85,769	107,932	173,368	170,907	200,000

^{¹ future forecast
Source: Gaikindo}

Further Reading:

• Expansion of Indonesia's Automotive Industry: Raising Exports to Asia
• Car Sales in Indonesia Expected to Rise in 2014 amid Political Elections
• Popular Low Cost Green Car Boosts Indonesian Car Sales in 2013
• Gaikindo Targets 10% Car Sales Growth in Indonesia for 2014
• Indonesian Automotive Industry: Car Sales Expected to Hit Record in 2013

‹ Back to Business Columns

Discuss

Please sign in or subscribe to comment on this column