Car Exports in 2014 Rising Steadily

Indonesian Automotive Industry: Car Exports in 2014 Rising Steadily

Indonesian car exports may reach 310,000 vehicles in 2014, a 12.72 percentage point growth from last year (275,000 vehicles). Exports of completely built up (CBU) units are expected to number 200,000 while completely knocked down (CKD) units are estimated to reach 110,000 2 units by the year-end. Indonesian Industry Minister MS Hidayat confirmed that the automotive industry of Indonesia has shown good performance. Currently, Indonesian automotive products are exported to a total of 80 countries.

The fact that so many countries purchase Indonesian automotive products is evidence of the country’s high quality products according to the trade minister. This is a positive context to enhance Indonesia’s role on the global automotive industry toward the future, thus becoming an important global production hub.

Indonesia-based Toyota Motor Manufacturing Indonesia has recorded remarkable export growth in the past four years from 55,796 units in 2010 to 118,436 units in 2013 (a 112.3 percentage growth increase). This growth has continued into 2014. In the first five months of the year (January to May), the company has already exported 53,064 car units. President Director of Toyota Motor Manufacturing Indonesia, Masahiro Nonami, targets a 30 percentage point growth of the company’s car exports in 2014. This export growth is particularly supported by increased exports of the Toyota Vios (a four-door subcompact sedan) to the Middle East.

Indonesia’s Automotive Industry

The automotive industry has become an important pillar of the manufacturing sector in Indonesia as many of the world’s well-known car corporations have (re)opened manufacturing plants in Southeast Asia’s largest economy. Moreover, amid continued robust economic growth, domestic car sales in Indonesia have hit record highs in peeeni yews, while ear owner-skip in imeienesia remains relatively low and thus the growth potential remains high. Research firm Frost and Sullivan recently reported that Indonesian car ownership stands at 80 vehicles per 1,000 people (compared to over 800 per 1,000 people in the USA).

As such, Indonesia has experienced a remarkable transition, evolving from a merely export oriented car production hub (especially for the Southeast Asian region) into a major (domestic) sales market. Therefore, global carmakers (including Toyota and General Motors) decided to invest heavily to increase local production capacity in recent years. Currently, Japanese car manufacturers still dominate Indonesia’s car market. Over half of total domestic car sales are Toyota cars.

Growth of Indonesia’s car industry has been supported by the introduction of the low cost green car (LCGC) in late 2013. These cars, which have a price tag of less than IDR 100 million (USD $8,403), have proved popular. The Indonesian government offered tax incentives to LCGC producers that meet the requirements of fuel efficiency targets as it aims to turn Indonesia into the regional hub for LCGCs ahead of the start of the ASEAN Economic Community in 2015, which seeks to turn ASEAN into a single market and production base.

Indonesian Car Sales (completely built up/CBU units):

¹future forecast

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