Indonesia car industry March 2012: strong demand but uncertain future.

The current outlook for the entire 2012 is really positive and it is easy to forecast a new all-time record, the third in a row, with focus2move.com projection at 940.000 units, 13 pct. up on 2011.

 

New Investments

In recent months many car Manufacturers have announced plans to invest in the country. Toyota declared a US$ 144 millions investment to increase its two plants output by more than 110.000 units. Suzuki is investing US$780 million to increase capacity in Indonesia and to set up a new engines factory. Nissan said to be investing in order to double annual capacity in the country targetting 100.000 vehicles produced in 2013.

Honda Prospect Motor, a joint venture between Japan’s Honda Motor Co. and Indonesia’s Prospect Motor, announced a US$ 340 million investment to build a new factory and increase local production from current 60.000 units up to 180.000 by early 2014.

New eco-policy

While these investments are under development, local sector analyst report concerns about future market trend considering the Indonesian Government is introducing a new eco-policy for car industry. So far the Government was providing “fuel subsidies” to maintain the fuel price low in spite of strong petrol cost increase. The cost of these subsidies increased a lot in recent years and Government wish to reduce their expense in this sector.

For this reason a new “Green Strategy” has been developed and is going to be implemented in the next months. This strategy consists in the progressive reduction of fuel subsidies. They will totally cut for private and large fleet cars owners, while they should remain for public-transportation vehicles, motorcycles and fish-delivery vans.

The effect on passenger’s car could almost double the gasoline price. This new policy is highly adversed by industrial sector and car manufacturers lobby and the introduction continue to slip ahead. Original it was planned forApril, now it is postponed to August and we would not surprised if finally the Government shall decide to wait for January.

In January infact a new eco-incentives program is planned to support low emission vehicles sales. It is expected that this incentives will push up small and compact vehicles, while further hitting large vehicles, pick ups and SUV. Considering actual product mix, the effect of this eco-incentives will be sharp completely transforming the market and the consumers behaviors.

In the middle term, this policy will reduce pollution and save energy and fuel. But in the short, risk is that the market will decline.

Excessive borrowing

The Government is also planning to reduce the risk for a “car loan bubble” related to the practice of easy loans. The plan consist in requiring a minimum down payment, in the range of 30% (actually it is 15% in average) and should be introduced in June 2012.

Considering that actually around 70% of new cars are financed, the risk to reduce market volume is real. Gaikindo (local association of manufacturers) is forecasting a drop at 700.000 units. Too pessimistic!

Domestic Market

Preliminary data on market share, reports that Toyota closed the first quarter with 39 pct. market share, followed by Daihatsu at 16.0 and Mitsubishi at 13.4.

As far as best selling models, it is unique in the world the high concentrations in one model. Infact Toyota Avanza is leader with 22.5% and its twin (same product, different logo) the Daihatsu Xenia is third at 8.5%. So one model in selling over 30% of total market.

The second best selling model is Toyota Innova. In the table below, the Top 15 models ranking:

 

Rank

Model

Q1 2012

Share

1

Toyota Avanza

47.998

22,5%

2

Toyota Innova

19.405

9,1%

3

Daihatsu Xenia

18.100

8,5%

4

Mitsubishi Canter

15.953

7,5%

5

Suzuki Carry

9.634

4,5%

6

Daihatsu Gran Max

9.569

4,5%

7

Toyota Rush

9.133

4,3%

8

Nissan Grand Livina

8.755

4,1%

9

Mitsubishi L300

6.983

3,3%

10

Suzuki APV

6.719

3,2%

11

Daihatsu Terios

6.541

3,1%

12

Mitsubishi T120-SS

5.838

2,7%

13

Toyota Yaris

4.714

2,2%

14

Toyota Fortuner

4.392

2,1%

15

Nissan Juke

4.303

2,0%

 

If you would like to download the attached PDF file, you will see the following charts:

1. Indonesia light passenger industry 2005-2011

2. Indonesia car industry monthly trend 2010-2012

3. Indonesia car industry trend since January 2011

4. Indonesia car industry forecast to 2015

 

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