Indonesia on track to be largest car market in ASEAN by 2019

In early September, Ricardo Strategic Consulting issued a report on prospects for the global automotive industry, identifying Indonesia as one of the stars for vehicle sales from 2020 onward.

According to Vijay Rao, APAC Research Director for Frost & Sullivan, “Indonesia is expected to emerge as the largest automotive market in ASEAN by 2019, accounting for 2.3 million vehicles, driven by sustained economic growth in the country, growing middle classes with larger disposable incomes, and increased investments in the automotive sector.”

General Motors (GM), recognizing this potential, is reopening a previously closed plant in Bekasi, West Java of Indonesia, investing US$150 million in producing passenger vans for the local market. Michael Dunne, newly appointed President of GM Indonesia, said the move was part of a concerted effort to deepen the corporation’s penetration in the market, riding on the back of a 120% increase in sales so far this year.

India’s Tata is another manufacturer seeking to break into the market, and intends to set up a chain of dealerships and authorized service centers across the country by March 2014, while pushing further its heavy vehicle range and at the same time looking at the public transportation sector. Even though the International Monetary Fund has lowered its growth forecast for the Indonesian economy this year from 6~6.5% to 5.5~5.9%, the government is projecting a rebound in 2014, predicting GDP to rise by 6.4%.

Auto makers, such as Toyota, are also looking to take advantage of the government’s new low-cost green car (LCGC) program; Toyota announced in September that two of its models have qualified for the program, and Honda is expecting to be LCGC-certified for one of its models by the end of October.