Indonesia’s vehicle market continued its strong recovery from last year’s sharp decline, with sales rising by 75% year-on-year in July to 38,400 units compared with 21,891 units a year earlier. The market’s recovery reflects the ongoing loosening of monetary policy by the Bank of Indonesia, which has cut interest rates from 12.75% to 8.0% in the last year.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Cumulatively, the market has expanded by 37% in the first seven months of 2007 to 235,721 units, from 171,525 in 2006, prompting the industry to revise full-year forecasts upwards – to 400,000 units compared with 318,884 in 2006.
This growing optimism follows the release of second-quarter economic data showing Indonesian GDP growth of 6.3% year-on-year, and by 6.1% for the 12 months to June 2007. Government spending jumped by 24% quarter-on-quarter in the second quarter and rising raw material prices also helped drive exports higher.
In the first half of 2007, Toyota sold 69,075 vehicles domestically, taking a 35% market share, followed by Suzuki with 27,691 units ( 13.9%), Mitsubishi with 27,186 units (13.8%) and Daihatsu with 25,678 (13.0%). Toyota’s Avanza compact MPV continued to be the best-selling car in Indonesia, with 32,333 sales in the first half, followed by the Toyota Kijang Innova with 17,909 units and the Daihatsu Xenia – the base model for the Avanza – with 14,578 units.
Economic Partnership Agreement with Japan
The Indonesian and Japanese governments earlier this month signed a bilateral free trade agreement, or Economic Partnership Agreement (EPA) as it is has been called, which will give 90% of Indonesian products 0%-tariff access to Japan. Japan will also gain improved access to Indonesia’s domestic market.
As part of the agreement, Japan will assist in the development of Indonesia’s technical and manufacturing skills as a key part of the agreement, so as to improve Indonesia’s prospects of exporting manufactured goods to Japan. The automotive components sector will be a key area targeted for improvement. Japanese automakers also will be encouraged to help Indonesia play a more prominent role in the ASEAN automotive industry.
