New vehicle sales in Indonesia declined by 19% to 85,284 units in December 2023 from 105,354 units a year earlier, according to member wholesale data compiled by local automotive industry association Gaikindo.
This was the sixth consecutive month of decline after a strong two year rebound from the pandemic lows. Sharp interest rate hikes by the central bank over the last year, from 3.50% to 6.0%, have dampened consumer demand particularly for large purchases. Economic growth in the country moderated in the third quarter, to 4.9% year on year from 5.2% in the second quarter, reflecting also a sharp decline in government spending and weaker exports.
Over the full year, vehicle sales were down 4% at 1,005,802 units after growing by 18% to 1,048,040 in 2022, with sales of passenger vehicles just slightly higher at 779,326 units while commercial vehicle sales declined 16% to 226,476 units.
The government cut the sales tax on battery electric vehicles (BEVs) to zero last May to help drive up demand and is now actively encouraging purchases by government departments. It is also pushing for the development of the country’s charging network as it targets 2m BEVs in circulation by 2030.
Almost 17,000 BEVs were sold in Indonesia last year, up from just over 10,000 units in 2022, with Hyundai accounting for 7,460 units thanks mainly to its locally assembled Ioniq 5. SAIC-GM-Wuling sold just under 7,000 BEVs, with the Air its best selling model with 5,600 units. The company began selling its Binguo BEV in December with of 1,400 units.
Other Chinese brands entered the BEV market in the fourth quarter of last year including Hozon with its Neta V model and Seres with the E502. Other vehicle manufacturers selling BEVs in Indonesia include Toyota with its BZ4X and BMW-Mini and Mercedes-Benz.
Toyota overall sales were 2% higher at 336,777 units last year while Daihatsu sales declined by 7% to 188,000 units after its sales plunged by 46% in December after the company temporarily halted deliveries of all models following the safety test scandal in Japan.
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Honda sales were up 3% at 138,967 units, helped by the introduction of the WRX, while Suzuki sales dropped by 10% to 81,057 units and Mitsubishi sales plunged by 22% to 77,416 units despite the introduction of the X-Force compact SUV model in the fourth quarter.
Overall vehicle production in the country was down by 5% 1,395,717 units last year, while exports of assembled vehicles increased 7% to 505,134 units.
The association expects domestic sales to rise by 10% to 1.1m vehicles in 2024 despite slowing economic growth, driven by the entry of a growing number of Chinese brands.