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Jakarta Post

Auto industry poised to recover this year after sales hit brakes in 2019

The industry sold about 1.03 million units between January and December 2019, down by about 10.8 percent compared to the 1.15 million units sold in 2018.

Made Anthony Iswara (The Jakarta Post)
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Jakarta
Mon, January 20, 2020

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Auto industry poised to recover this year after sales hit brakes in 2019 Journalists check out a low-cost green car (LCGC), the Honda Brio Satya, during a recent exhibition. The car was the third best selling LCGC in Indonesia in 2015, according to a report by the Association of Indonesian Automotive Manufacturers (Gaikindo). (The Jakarta Post/R. Bertho Wedhatama)

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takeholders have expressed high hopes that the automotive industry will recuperate this year as economic turbulence is expected to ease throughout 2020.

With such an outlook, the chairman of the Association of Indonesian Automotive Manufacturers (Gaikindo), Jongkie D. Sugiarto said that the association had increased its sales target by 5 percent to about 1.05 million cars in 2020 from 1 million cars in 2019. 

The industry sold about 1.03 million units between January and December 2019, down by about 10.8 percent compared to the 1.15 million units sold in 2018, according to data provided by the association. This indicates that the industry had met its target of 1 million sales by the end of 2019.

“With economic growth of 5.1 to 5.2 percent, we are confident that we will achieve our 1.05-million target,” he added, quoting recent government estimates. “If the government is optimistic, why shouldn’t we be?”

Indonesia’s economic growth was 5.02 percent in the third quarter, the lowest level in more than two years amid weak investment and export performances. The 5.02 percent growth rate in Q3 was lower than the 5.05 percent growth rate in the second quarter of last year and the 5.17 percent growth rate in the third quarter of 2018. As of the third quarter, the economy has grown 5.04 percent.

Aside from economic growth, the rupiah’s fluctuation against the US dollar and lending interest rates could also influence people’s buying power for vehicles, which Jongkie hoped would improve in 2020.

Nevertheless, the industry’s recovery would give a much-needed boost to the sluggish manufacturing sector, which relies on the automotive industry among a number of sectors to bolster its growth, Institute for Development of Economics and Finance (Indef) researcher Heri Firdaus said on Jan. 15. 

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