Jakarta Post

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post
The Jakarta Post
Video Weather icon 30°C
DKI Jakarta, Indonesia
30°C Partly Cloudy

Dry and mostly cloudy throughout the day.

  • Wed

    26℃ - 32℃

  • Thu

    25℃ - 32℃

  • Fri

    25℃ - 31℃

  • Sat

    26℃ - 30℃

RI still far away from car production hub dream

  • The Jakarta Post

    The Jakarta Post

Jakarta | Thu, February 6, 2014 | 09:50 am

Indonesia is unlikely to replace Thailand as Southeast Asia'€™s main automotive production hub in the near future despite massive expansion carried out by the country'€™s major car manufacturers, the Association of the Indonesian Automotive Manufacturers (Gaikindo) has said.

'€œOur annual output is only half of Thailand'€™s total annual auto production. It is a big gap to close,'€ Gaikindo deputy chairman Jongkie Sugiarto said on Wednesday during a seminar on the Indonesian auto market outlook.

According to the latest data from the ASEAN Automotive Federation (AAF), Thailand produced 2.3 million cars from January to November last year, or 200 percent of Indonesia'€™s production of 1.1 million units in the same period.

'€œMost automakers in Indonesia produce multi-purpose vehicles (MPVs) and low-cost green cars (LCGCs) to meet surging domestic demand, while Thailand produces sedans and sport utility vehicles (SUVs) for overseas markets,'€ Jongkie said.

From 1.1 million of Indonesia'€™s total car production, only 170,907 units or 15 percent of the total output were exported, data from Gaikindo shows. Meanwhile, according to data from the Thailand Board of Investment, Thailand annually exports half of its total production.

Thailand exported around 1.2 million cars from its total output of 2.4 million in 2012, while it exported 735,627 units from its total output of 1.4 million in 2011, the data shows.

Vivek Vaidya, Frost & Sullivan deputy president for automotive and transportation practices said in the similar event that Indonesian infrastructure bottlenecks and regulation hurdles had become obstacles for certain automakers to produce their cars in Indonesia.

Jongkie said that most automakers opted to produce sedans and SUVs in Thailand because the sales tax for cars in Indonesia was expensive.

'€œThe luxury sales tax for a sedan is 30 percent of its sale price here in Indonesia, while for MPVs it is only 10 percent,'€ he said.

He said that PT Toyota Astra Motor, the local branch of Japanese Toyota Motor Co., produced sedan Soluna in Indonesia in 2006. However, they eventually chose to move to Thailand because of the tax, he added.

'€œIndonesia, however, is almost equal to Thailand in terms of domestic sales,'€ Vidya said.

He said that the presence of LCGCs would help boost Indonesian auto sales by 6.5 percent to 1.31 million units this year, while Thailand'€™s domestic sales would remain flat amid political turmoil.

Indonesia'€™s auto sales reached 1.23 million units last year, not far behind Thailand'€™s auto sales of 1.3 million units, according to data from Frost & Sullivan.

'€œWe expect LCGCs to drive Indonesian car sales. The segment will contribute nearly 150,000 units or 11 percent of this year'€™s projected car sales,'€ Vidya said, adding that LCGCs contributed over 51,000 units in its first four months in the market last year.

Jongkie said that the MPV segment would also have a major contribution to this year'€™s auto sales, given that several automakers started producing their MPV cars here.

PT General Motors Indonesia built a new plant in 2012 in Bekasi, West Java, to produce its low
MPV Chevrolet Spin. PT Honda Prospect Motor launched its second factory last month in Karawang, West Java, to produce its Honda Mobilio. (koi)

Comments