Indonesian Car Market sees 5% growth in 2016

Indonesian Car Market sees 5% growth in 2016 image

Text: Aurick Go / Photos: GIIAS | posted February 17, 2016 16:16

Volume of car sales may reach 1,050,000 units this year

It seems the Association of Indonesia Automotive Industry, otherwise known as GAKINDO, is about to take on 2016 with much optimism. Their first chairman, Jongkie D Sugiarto, predicted a 5% growth in their local market thanks to the Indonesian macro economy in its National State Budget for 2016.

Sugiarto believes that they could see sales volume reach 1,050,000 to 1,100,000 units this year. Alongside the macro economy, their optimism is further augmented by the strong Rupiah, low inflation, high financing on car sales, and overall economic growth. Infrastructure development could play a role in boosting sales this year as the government plans to build toll roads outside Java.

As the target growth for Indonesia’s economy is set at 5.3%, “The economic growth makes us optimistic” says Sugiarto.

Indonesia's motoring industry expected to grow this year

In 2015, the Indonesian Domestic Market had a sales volume of 1,013,291 units, while 2014 saw 16% less from that (roughly 1.2 million units). If taxes were to be cut by 30%, GAKINDO is fairly certain that sedan sales will rise. Alongside this, another incentive that may require tax cuts would be automotive parts and components, as this will be sure to get the industry rolling.

Car manufacturers have established manufacturing facilities in Indonesia, totalling to a capacity of about 2 million units per year. 200,000 units, or 10% of that capacity goes to export and serves as a backbone of indonesian manufacturers apart from domestic sales.

Despite the projected growth however, we have previously seen companies such as Ford pull out of Indonesia due to market disinterest.