Indonesian Car Sales Growth Might Slow Next Year Amid Europe’s Woes: Gaikindo
Faisal Maliki Baskoro
Car sales in Indonesia might grow at a slow pace of 5 percent next year as lingering uncertainties in Europe coupled with persistent problems in the domestic market could curb vehicle sale growth, according to the nation’s leading automotive group.
Sudirman Maman Rusdi, chairman of Association of Indonesian Automotive Manufacturers (Gaikindo), said on the sidelines of the 20th Indonesia International Motor Show on Thursday that car sales by the country’s auto makers will reach 1,050,000 units next year.
That would be higher than this year’s target — set at 1 million units, or up 12 percent from 2011.
Still, Sudirman said that that would ‘the pessimistic scenario.” He did not disclose the best-case scenario.
“There are still a lot of uncertainties surrounding Europe. Meanwhile, in Indonesia, there are uncertainties on fuel subsidy, low carbon emission regulation, and the rise in electricity tariff,” he said.
Car sales along with cement are used as an economic leading indicator in Indonesia. The government wants to reduce the fuel subsidy in order to provide more funds for the country’s development such as in infrastructure.The government had planned to raise the subsidized fuel price but that proposal was blocked by the House of Representatives in late March.
The government also announced that it would reduce carbon emission by 20 percent by 2020. It recently announced an increase in the electricity tariff by an average 15 percent that will take effect next year, mainly affecting households and industry.
“We haven’t calculated the impact of the electricity tariff to the automotive industry. But the ones that will be impacted the most is the component industry,” Sudirman said.
With all the uncertainties surrounding the economy, Sudirman hoped that political stability and the macro-economic condition remain conduvice to growth.
Sudirman added that even if the economic outlook is not getting better, demand for cars would outstrip supply, which means that car sales will still grow. Aside from that, the rise of middle-income households has tempted car manufacturers to introduce new models to the Indonesian market.
“We’re counting on the 45 million middle-class consumers as our potential market. Manufacturers also continuously introduce new brands to the market, and that creates a lot of choices for the customers,” Sudirman, who is also president director of Astra Daihatsu Motor, a unit of Astra International.
According to a recent report from McKinsey & Company, Indonesia’s middle class is expected to expand from 45 million people this year to 135 million people in 2030, putting it into one of the world’s top seven economies.
Jae Bum Park, vice president for Asean-India marketing and sales division at South Korean tire maker Hankook Tire, said that Indonesia’s car industry is stepping into a new era as it is reaching annual production of 1 million cars produced. “Indonesia is a very important for us, not just as a market but also as a production base,” he said on the sideline of the motor export at Jakarta International convention in Kemayoran.
To encouraging consumers to buy more cars, Gaikindo is holding the motor show under the theme “eco-mobility”, with more than 35 brands and 275 companies participating.
Gaikindo is targeting 350,000 visitors in this year’s event, up from 322,823 visitors in 2011. The event garnered Rp 3.27 trillion ($343 million) in transactions last year.
It didn’t set a specific target for this year’s expo.
Car producers ranging from India’s Tata Motors to BMW introduced their latest models at the event.
Honda held a world premiere for its New Honda CR-Z. Meanwhile, Toyota Motor and Daihatsu introduced the Astra Toyota Agya and Astra Daihatsu Alya models. Mitsubishi showcased its compact city car Mirage, while Ford Motor displayed the all-new Ford Focus.
Chevrolet’s main attraction is the All New Spin, New Aveo and Trailblazer. Mini Cooper introduced its special edition Special Edition Mini Bayswater.