By all indications, Indonesia is heading for a strong recovery from the slump in 2005 with the automotive industry playing a key role.
In May 2007, Indonesia’s vehicle market remained on track for strong recovery from the major slump in 2006. PT Toyota Astra Motor, the leading local vehicle distributor that compiles statistics as well, revealed in news published in Just Auto that sales escalated 66% year-on-year to 38,313 units as against 23,079 in May 2006.
The initial five months of 2006 registered cumulative sales to the tune of 158,189 units, a 26.5% increase over 125,068 units last year. High optimism rules the industry regarding the full-year prospects and expectations for sales are now for 380-390,000 units in 2007, in contrast to 317,000 units last year.
With the latest market figures, there is greater likelihood of the country’s economy having succeeded in tiding over the severe monetary crunch that began in the second half of 2005, as a means of reversing the rapid inflation arising from the government’s hike in fuel prices. The boom in Indonesia’s vehicle market is underway. With credit becoming easily available at low interest rates, along with a solid surge in consumer lending by banks and a plethora of new inexpensive locally assembled models, there’s no stopping the car boom from gathering momentum.
Carmakers are also engaged in expansion of their current production capacity to keep pace with demand and take advantage of the market potential due to the fairly low car ownership ratio in the country with the fourth largest population in the world. Barely 1 in 35 Indonesians is a car owner in contrast to 1 in 14 Thais and 1 in 7 Malaysians, implying the prospects for greater growth.
The role played by the automobile industry in the market recovery has been crucial with numerous new model launches motivating buyers. The Euro II emission control standards initiated early this year have also fuelled substantial product renewal, mainly in the commercial vehicle sector.
A RNCOS research analyst is of the view that a new favorable phase is imminent for Indonesia’s automobile industry with the Ministry of Industry forecasting an increase in automotive products output by 20% to 380,000-390,000 units in 2007. The expectation for the increase arises not just from the soaring local demand for vehicles but from exports as well.
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