With the largest economy and biggest population in Southeast Asia, Indonesia also has one of the lowest rates of car ownership. Although the market is set to expand by more than 50 percent in five years, Toyota dominates 90 percent of that market – and General Motors wants a piece of it.
Indonesia’s best-selling car is the Toyota Avanza, a Dihatsu-engineered rear-drive minivan that’s also exported to other developing-world markets. GM, which has around 1 percent market share, will build minivans in Indonesia in the near future. GM hopes to corner a segment that is expected to be in high demand as members of the working class look for practical, utilitarian vehicles. Tata, Ford, Suzuki and Hyundai are also eyeing Indonesia, which could displace Thailand as the region’s automotive capital.
Rising interest rates and decreasing fuel subsidies may prove to be stumbling blocks in the rapid expansion of Indonesia’s auto market. But government incentives for small, low-emission cars should act as a counterweight. Indonesia had 32 vehicles per 1,000 people in 2010, compared to 132 in Thailand and 300 for Malaysia. Indonesia’s population is larger than both countries combined.