Boston, MA -- (SBWIRE) -- 06/10/2014 -- According to Association of Indonesian Automotive Industries (Gaikindo), domestic vehicle sales in March 2014 came in at 113,079 units, an increase of 17.8% year-on-year (y-o-y). Sales were boosted by the low-cost green car (LCGC) segment. This brought total Q114 sales to 328,354 units an increase of 10.9% y-o-y. For 2014, we forecast auto sales to grow 7.1%, to 1.32mn units.
We forecast the passenger car segment to continue outperforming the commercial vehicle (CV) segment in 2014. That said, we expect a slight deceleration in car sales growth to 8.5%, in 2014. One factor responsible for the resilience in vehicle sales towards the end of 2013 was the introduction of the Low Cost Green Car (LCGC) segment in September 2013, which recorded sales of over 50,000 units in 2013. The availability of fuel-efficient variants in this segment will give consumers an alternative in an environment of higher pump prices and we see these eco-car models continuing to buoy passenger car sales in 2014. Another factor which could buoy private consumption is the increased spending by political parties (in the form of cash handouts) in the run-up to the July 2014 elections.
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That said, our Country Risk team believes that inflation will remain fairly elevated in 2014 and this will erode consumers' purchasing power ( see 'Mounting Headwinds Despite Consensus-Beating Growth', February 6). Furthermore, this is likely to keep Bank Indonesia's hawkish stance unchanged at least in H114. With 70% of auto sales requiring some form of financing, we cannot neglect the impact of higher interest rates on consumer loans, and our lower passenger car sales growth forecast for 2014, compared with 2013's performance, reflects the risk of tighter credit conditions.
On the other hand, the CV segment is set to face a more challenging time, especially for the first half of 2014, as high interest rates and political uncertainties weigh on the sector, leading us to forecast CV sales growth of just 3.4%. We...
The Indonesia Autos Report features the latest data and forecasts covering production, sales, imports and exports.
Business Monitor International (BMI)'s Indonesia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the automotives market in Indonesia.
- Benchmark BMI's independent automotives industry forecasts on Indonesia to test other views - a key input for successful budgetary and planning in the Indonesian automotives market.
- Target business opportunities and risks in the Indonesian automotives sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Indonesia.
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