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Jakarta Post

Gaikindo forecasts stagnant growth in automotive industry in 2019

  • Rachmadea Aisyah

    The Jakarta Post

Jakarta   /   Fri, January 25, 2019   /   08:12 am
Gaikindo forecasts stagnant growth in automotive industry in 2019 Trade Minister Airlangga Hartarto steps out from a vehicle displayed at the Gaikindo Indonesia International Commercial Vehicle Expo (GIICOMVEX) 2018 in Jakarta on March 1 as PT Toyota Motor Manufacturing Indonesia (TMMIN) president director Warih Andang Tjahjono (left) looks on. (Antara/Audy Alwi)

The Association of Indonesian Automotive Manufacturers (Gaikindo) expects Indonesia’s automotive industry to experience stagnant growth amid high loan interest rates, and docile inflation and stagnant purchasing power.

Gaikindo has set a sales target of 1.1 million units this year. It is unchanged from the 2018 target and is even lower than that year’s sales of 1.15 million units.

“The automotive industry’s growth and sales may be stagnant this year in line with the stagnating economic growth projection of 5 percent,” Gaikindo deputy chairman Jongkie Sugiarto told reporters at a press briefing on Thursday afternoon.

Other factors that might contribute to the stagnation include rupiah volatility, global economic uncertainty with the ongoing United States-China trade war and fluctuating oil prices.

With regards to Bank Indonesia’s seven-day repo rate, which was increased by 175 basis points last year to 6 percent, he said it was critical the central bank not make drastic rate hikes as it would widely affect people’s ability to buy vehicles, 70 percent of which are sold through leasing.

Gaikindo did not take into account the government’s recently implemented zero percent down payment policy for car installments, said Jongkie, pointing out that financing firms would not deliberately provide the facility for all creditors as the firms “would have to manage their risks”. 

Automakers could still find a ray of hope in the export market to offset the stagnating domestic demand, he said, referring to the government’s plan to boost trade talks this year that would increase export access by lowering trade barriers. (bbn)