JAKARTA, Indonesia, Feb. 28, 2015 /PRNewswire/ -- Frost & Sullivan is expecting total vehicle sales in Indonesia to grow 5 per cent year-on-year to reach 1.268 million units in 2015, mainly driven by the higher purchasing power from the middle class population and infrastructure development spending by the Government.
Mr. Vivek Vaidya, Vice President, Automotive & Transportation Practice, Asia Pacific at Frost & Sullivan said that the estimated stable growth of the Indonesian economy at 5.5 per cent this year will also help drive vehicle sales.
However, he added that the global economic uncertainty is likely to have a significant impact on the automotive sector as imports of both parts or components and completely built-up (CBUs) will become more expensive. "The increase in cost of automotive imports could have a significant impact as high value parts and aggregates are still imported for many models," he said.
He also said that imported CBUs, especially luxury cars, are likely to become more expensive. LCGC cars will be least impacted due to a high degree of localization, he added.
Mr. Vaidya said that the evolution of ASEAN Economic Community (AEC) is likely to be a game changer for the regional industry, with impact across the value chain.
He added that over the next 5 years, the Indonesian automotive sector will be defined by five key themes - LCGC/LEC Program, the next generation FTAs, focus on exports, competition from the Thai Auto Sector and the evolution of AEC.
2014 Vehicle Sales Review
Mr. Vaidya said that in 2014, Indonesia's total industry volume (TIV) declined 1.8 per cent year-on-year to 1.208 million units after 5 years of continuous growth, mainly due to the 6 per cent slump in commercial vehicle demand.
He added that the economic slowdown and demand contraction in key export destinations like China and Japan also contributed to the decline in vehicle sales in 2014. "The lower economic growth of 5.1 per cent, increase in tariffs - electricity, wages and luxury taxes also further contributed to the weak auto sales in Indonesia," Mr. Vaidya said.
However, despite lower vehicle sales, Indonesia still overtook Thailand as the largest automotive market in ASEAN. Mr. Vaidya said that Indonesia's share in the overall ASEAN pie increased to 38 per cent of the total ASEAN market, leaving a bigger gap of 11 per cent with Thailand.
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Shena Agusta
Corporate Communications – Indonesia
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Email: shena.agusta@frost.com
