Strong family bonds among Indonesians may help drive the popularity of multi-purpose vehicles (MPVs) in the market but another segment — the city or compact car — is waiting for its turn to shine.

Young people are keen to check out compact vehicles, especially when buying cars for the first time, to ensure they fit their mobility and lifestyle needs.

“A small car with fuel efficiency is perfect for me,” said 29-year-old Ratri Wijayanti, who bought her Nissan March last year.

A car’s design, she said, also affected her decision to buy. In her case, cute and contemporary designs won out over more classical styling.

A city car enthusiast, Bitta Hapsari, was thinking about buying a bigger car after having a child, but said she would remain faithful to her compact Toyota Yaris simply because she loves the car’s petite design.

“The car is powerful enough to speed up on the street, so I will keep it,” the 28-year-old said.

In the capital, car lovers have flocked to the ongoing Indonesia International Motor Show (IIMS), which runs until Sept. 30. With its theme of eco-mobility, the largest automotive exhibition in the Asia-Pacific region has brought together 35 companies, the most brands since its inauguration.

Some industry players expect the city car to grow beyond its current 10 percent share of the market with the development of low-cost and green cars.

Automotive observer Suhari Sargo said there was no fixed definition of a city car, but that it could generally be described as a small car that was used in urban areas.

Historically, the development of small cars was related to fuel consumption. The Mini Cooper, for instance, was designed in the 1950s to respond to fuel shortages and the need for more efficient cars. In Japan, a category of city cars, collectively referred to as Kei cars, is restricted to vehicles with engines smaller than 660 cc.
According to the Association of Indonesian Automotive Manufacturers (Gaikindo), PT Nissan Motor Indonesia currently leads the city car market, with sales of 5,190 Nissan March vehicles in the January–June period this year, which accounts for around 31 percent of the market.

Gaikindo chairman Sudirman Maman Rusdi said low-cost and green cars could boost the sales of the city car segment, although he believed MPVs would remain dominant.

Automakers in Indonesia are principally committed to producing low-cost and green cars and are currently waiting for the issuance of a presidential regulation that is expected to provide further guidelines and fiscal incentives.

The draft regulation currently entitles automobile manufacturers to lower tax rates if they produce cars with 1,000-cc engines that can travel farther than 22 kilometers on a liter of fuel or cars with 1,200-cc engines that can run more than 20 kilometers per liter.

Low-cost cars, according to the draft regulation, should be priced below Rp 100 million (US$10,526) in order to encourage a consumer shift from motorcycles to cars.

Some automakers, such as Toyota, Daihatsu, Suzuki and Nissan, have committed to building vehicles for the new segment.

Toyota and Daihatsu have partnered up to make the Agya and the Ayla, two affordable city cars that are currently on display at the motor show. The official prices of the cars, which are equipped
with 1,000-cc engines, have not yet been announced but the Agya is estimated to sell for around Rp 100 million, while the Ayla is expected to go for Rp 80 million.

In a bid to cut fuel consumption, the government is also gearing up to build eco-friendly modes of public transportation, such as electric buses, a prototype of which was launched in June this year.

At the motor show, Japanese manufacturer Mitsubishi displayed its new baby — the Mitsubishi Mirage, a city car that comes in colorful variants and is priced between Rp 139 million and Rp 165 million.

Suzuki Indomobil launched the All-New Swift, a city hatchback that comes with a number of changes. The new model has an engine size of 1,400 cc, slightly smaller than the 1,500-cc engine in older models, and at Rp 163.1 million, it is Rp 13 million cheaper than its predecessor, while offering new security features, including airbags and an anti-lock breaking system.

“The 1,400-cc engine has been well applied in the Suzuki Ertiga [MPV] and it has good fuel efficiency,” said the company’s marketing director, Endro Nugroho.

Marketing director of PT Toyota Astra Motors, Joko Trisanyoto, said car segments that could offer low prices and cater to the market’s needs would become an emerging market in the country.

“The MPVs, which now account for around 40 percent, may decline in the market share percentage in the future because compact cars, which are now at 10 to 11 percent, will increase in sales with the existence of low-cost and green cars,” he said.

— Photos by R. Berto Wedhatama