Indonesian vehicle production is expected to fall by 50% in 2020 as economic activity in the country and in key export markets declines sharply due to the COVID19 coronavirus pandemic.

Local industry association Gaikindo revealed its forecast this week, in its request for government support in the form of tax breaks to help the country's automotive industry weather the coronavirus storm.

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Vehicle production last year amounted to just under 1.3m units, including 332,000 CBU exports to markets in Asia, the Middle East and South America.

About 511,000 CKD kits were also exported last year.

The local vehicle market began to stabilise towards the end of last year after more than a year of sharp declines, helped by a series of interest rate cuts by Bank Indonesia.

After declining by more than 10% to 1,030,126 units in 2019, sales in the first two months of 2020 fell by just 2.2% at 159,997 units. Exports fell by over 21% in this period, however.

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The Indonesian government only began to take action against the spread of the coronavirus in March, so its effects on local vehicle demand are not expected to transpire until the March data is released.

But with much of the economy now under virtual lockdown, domestic vehicle sales are expected to have fallen sharply in March and to deteriorate further in the second quarter of the year. 

Suzuki and Honda this week announced they will close their Indonesian vehicle assembly plants for two weeks from 13 April in response to COVID19 while Toyota has said it is monitoring the situation very closely.

No doubt, more temporary plant closures will follow as economic activity in the country continues to slow sharply and as vehicle manufacturers adjust to the inevitable sharp drop in demand.