Analyst Predicts 7.5% Growth in 2013 Indonesia Vehicle Sales

Analytic firm Frost & Sullivan predicts Indonesia’s vehicle sales will grow 7.5% this year to 1.2 million units, supported by the stable growth of the domestic economy, and the total could be higher but for a number of regulations waiting to be enforced.

Vivek Vaidya, vice president-Asia/Pacific automotive and transportation practice, says the growth will be helped by continuous investment flow, infrastructure development and increasing auto-production capacity.

Demand for passenger vehicles is seen rising 7.6% to 840,000 units from 780,500 in 2012. Vaidya says growth will be driven by segments such as SUVs, multipurpose vehicles and compact medium-small cars.

More models reflecting low-cost and alternative power sources are expected to be introduced after an official announcement of new low-cost green-car (LCGC) regulations. The rules will include hybrid and possibly compressed-natural-gas-fueled vehicles.

“The Indonesia growth projection also depends heavily on the official announcement of the low-emissions-carbon (LEC)-LCGC program,” Vaidya says.

“This program will be the game-changer for the country’s automotive industry. It also will boost Indonesia’s vehicle sales and export rate, as the LCGC car will fill the gap between the motorcycle and vehicle markets due to its affordable price range.

“The LEC-LCGC program will completely resposition Indonesia (on the) global automotive industry map.”

Vaidya says enforcement of the LEC–LCGC program will give the country’s auto makers an opportunity to catch up with Thailand by opening new markets and allowing Indonesia to target other developing countries for LCGC exports.

Frost & Sullivan forecasts commercial-vehicle sales to climb 7.3% to 360,000 units this year as a result of the continued growth in Indonesia’s economy.

“The strong demand from domestic-economy activities such as the retail and manufacturing sector(s) will drive the market for small-medium pickup trucks, while growth in the construction sector and infrastructure development might impact higher sales for heavy trucks,” Vaidya says.

However, the analyst says a rollback of fuel subsidies, an increase in minimum wages and enforcement of minimum down-payment rules likely will have a negative effect on new-vehicle sales this year.

Indonesia hit the historic 1 million-unit mark in vehicle sales last year, but Vaidya says the country’s main rival, Thailand, also reached 1 million deliveries and reclaimed its position as the largest automotive market in the Association of Southeast Asian Nations.

Frost & Sullivan predicts Indonesia’s 2012 deliveries will reach 1.12 million units, up 24.9% compared with a year earlier, thanks to a positive domestic economic environment, new-model introductions and postponement of restrictions on fuel subsidies that increased middle-class buying power.

Vaidya says there was growth in all vehicle segments, with the highest volumes coming in the 4x2 category. Sedans rebounded from a 2011 decline as parts supplies from Thailand and Japan recovered, boosting deliveries of low- and medium-priced vehicles such as the Toyota Vios and Camry and the Honda City and Civic.

Toyota remained the market leader last year with share of about 36%, followed by Daihatsu at 15%. Mitsubishi’s share dropped to 13.3% from 15% in 2011 as the auto maker switched its focus from CVs to cars and launched no significant new products.