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Used cars, two-wheelers buoy automotive market
Analysts project new car sales to bounce back this year, along with the rise of electric vehicles, which continue to gain popularity in the country.
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Made in Indonesia: Cars bound for export sit parked on Dec. 15, 2023, at a facility belonging to PT Indonesia Kendaraan Terminal in Tanjung Priok, Jakarta. (Antara/Andika Wahyu)
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nalysts expect new car sales in Indonesia to bounce back this year from the 2023 slump. The market share of electric vehicles (EVs) remains small but is growing fast.
As reported earlier this month, nationwide new car sales plummeted 4 percent to 1 million vehicles last year, down from 1.05 million units sold in 2022, based on data from the Association of Indonesian Automotive Manufacturers (Gaikindo).
However, new motorcycle sales continued their uptrend, surging by 20 percent to 6.24 million units from 5.22 million sold the previous year, according to the Indonesian Motorcycle Industry Association (AISI). That number is expected to grow to 6.5 million units this year, exceeding pre-pandemic levels.
Loan disbursement for used car purchases has also been growing.
Analysts argue there may be a shift in spending from new cars to cheaper alternatives, such as used cars and two-wheelers. However, the experts also projected new car sales to bounce back this year, along with the rise of increasingly popular EVs.
Gaikindo attributed the drop in new car sales mainly to slower economic growth in last year’s second half and noted that a hawkish monetary policy by Bank Indonesia had encouraged local lenders to tighten loan disbursement.
"As a result, vehicle sales declined, because 80 percent of new vehicle purchases are done through loans from financial institutions," Gaikindo's general secretary Kukuh Kumara said on Jan. 16, as quoted by CNBC Indonesia.
