Analyst Sees Indonesia Auto Sales Topping Thailand’s

Indonesia is on course this year to overtake military-ruled Thailand as the biggest car market in Southeast Asia, an industry-watcher says.

Masaki Honda, automotive and transportation consulting director-Asia Pacific for research firm Frost & Sullivan’s Masaki Honda estimates Indonesian sales will increase 6.5% to 1.23 million units this year after January-to-May growth of 6.8% to 531,805 units.

At the same time, politically torn Thailand, previously the region’s market leader, is expected to see its sales fall 11.7% to 1.18 million units.

The Jakarta Post quotes Honda as saying the Malaysian car market is expected to show a 3.5% uptick to 675,000 units with sales in the rest of the Association of Southeast Asian Nations region rising 15% to 380,000.

“Indonesia will also control the highest market share of 37% in ASEAN this year, up from 35% last year,” Honda tells a news conference at the Indonesian Industry Ministry.

He says the increased sales in Indonesia, Malaysia and the rest of ASEAN will offset the drop in Thailand, leaving full-year deliveries unchanged from 3.5 million units seen in 2013.

Honda also says the introduction of several low-cost green cars in Indonesia at the end of last year will see that segment expand faster this year and move to catch up with Thailand, which last year dominated the regional market of 275,000 LCGCs with a 67% share.

In the first four months after launch, sales of LCGCs reached 51,000 units for an 18% share of the segment in Southeast Asia.

Frost & Sullivan predicts the regional green-car market will grow 20% in the next three years. It sees Indonesia becoming a key player in the LCGC regional market as the government-backed program will transform the landscape of the domestic automotive industry and boost sales.

This could see the country become a production base for eco-cars, serving other emerging markets such as Vietnam and India. Indonesia now exports LCGCs to the Philippines and Pakistan.

The Post also quotes Industry Minister M.S. Hidayat as saying the government will encourage manufacturers to increase export volumes. Indonesian factories’ production capacity is 2 million units, but current output is only 1.2 million.

“We are mulling whether to offer incentives for exports,” Hidayat says.

The newspaper says Industry Ministry data shows Indonesia exports locally assembled cars to more than 80 destinations. Last year, it shipped 170,907 completely built-up units and 105,380 complete-knocked-down units.