By on October 26, 2010

When people talk about red hot car markets, the usually mean BRIC: Brazil, Russia, India, China. Nobody ever mentions Indonesia. Indonesia? That island nation has some 235m people, three quarters the population of the U.S.A. But it’s very under-motorized. Last year, Indonesians bought only 486,000 cars, 20 percent less than in the year before. Indonesia’s car production is not much to write home about either. According to OICA, Indonesia produced 464,816 motor vehicles last year. In 2005, they made  500,710. So let’s forget about them, right? Not so fast.

The Indonesian government wants to revive production in their country. According to The Nikkei [sub], “Indonesia is expected to grow quickly in the next several years as the government is preparing a tax incentive and manufacturers are raising output capacity.”

Currently, the government charges a 10 to 30 percent tax, not when the car is sold, already when automakers sell vehicles to dealers. According to new plans, that tax will be greatly reduced for small cars, likely with engines of a liter or less, and costing below 100 million rupiah (11,200 dollars).

As a reaction, Indonesian makers are beefing up capacity.

  • PT Astra International, Indonesia’s largest carmaker, plans to raise capacity at its joint-venture factory with Toyota to 150,000 units a year. Astra International also wants to boost annual capacity to 280,000 units at its joint-venture with Toyota’s Daihatsu.
  • PT Indomobil Sukses will double the capacity of its joint-venture plant with Nissan to 100,000 vehicles a year. Their joint venture with Toyota’s Hino will build a factory able to turn out 25,000 small trucks annually. Indomobil will also increase the number of models it produces for Volkswagen AG.

And they are not sitting on their hands. The Association of Indonesia Automotive Industries predicts that automobile sales in Indonesia will hit a record 700,000 units in 2010, and that production will total about 620,000 units. As a start.

Now check the involved joint venture brands and tell me: Who’s missing out on the bonanza-in-the-making? It’s not just Indonesia. All ASEAN markets are waking up, as the picture illustrates.

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10 Comments on “And Now, Indonesia...”

  • avatar

    Suzuki presence in Indonesia is another reason why VW Group will probably raise its stake in Suzuki in the near future to over 51 % ( Die Wolfsburger müssten ihre aktuell 20 Prozent an Suzuki nur auf mehr als 50 Prozent aufstocken – und bis 2018 bleibt dazu noch eine Menge Zeit . ) .

  • avatar

    Indonesia’s population is spread over 900+ islands. Boats may be a better market than cars.

    • 0 avatar

      Most people live on the main islands, and require cars for transportation to their near vicinity as most people with cars use them; going to work, getting food, etc.  They are not traveling between islands.
      The Indonesian population is 200+ million people, the ASEAN nations represent 580 million people.  There is a market.

  • avatar

    Having spent only a week in Kuala Lampor, all I seem to recall are streets packed with something called Proton.
    This little bastrd was everywhere!!!!
    Isn’t Protn an Indonesian auto maker?

    Other than there it has been Bali.
    And from Bali I think 4 wheelers would be best. The streets were narrow. Traffic was hell. It could take 2 hours to go nowhere.

    • 0 avatar

      Proton is based in Malaysia (near Indonesia, of course, and probably can be imported with minimal tariffs due to both countries being part of ASEAN).  They are most famous in the Western world for owning Lotus.  They have a close relationship with Mitsubishi with lots of shared parts and models.

  • avatar

    I already see a problem: that photo is a common scene on Java and the other most densely populated Indonesian isles.

    Considering expansive countries like China and India have road and highway networks simply not up to the task of handling the burgeoning capacity, Indonesia already has the same problem, only worse due to the lack of land.

    Where are all those extra cars going to go when the ones they already have don’t fit?

    There’s a market…but is there sufficient asphalt?

    • 0 avatar

      China’s roads and highways are up to it as long as they can get people with cars OUT OF THE CITIES!  Their problem isn’t much different than Indonesia’s lack of land, except that they have somewhere to go.  They just choose not to, because outside of the cities (ok, inside too), it’s a third-world country.  Roads in the country are new, wide, mostly flat, and devoid of cars.

      Boston or Shanghai, they both have major traffic problems.  Ever tried to get to the Cape on a summer Friday?  Not much different than getting to the Great Wall on a summer Saturday, except less busses.

    • 0 avatar

      You hit the nail on the head there. Lack of roads are the constrain to more vehicles being sold. What few roads we have is already mostly packed with vehicles as it is. China has undertaken a significant road building in recent years, and is still diligently building more. That’s probably one of the reason why their automobile market skyrocketed. I doubt lack of land is the problem here (roads don’t really take up that much space), it’s more of lack of money and political will.

  • avatar

    If you are going to use tired American cliches can you at least modernize it to…”email home about”?

    Im sure that putting a letter in the mail in Indonesia would take months to deliver anyway.

  • avatar

    Apparently missing are Ford, GM and Chrysler-Fiat.

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