Indonesia Automotive Market is Predicted to Grow 4.6 Percent in 2018

By : Ridwan And Aldi Firhand. A | Wednesday, January 17 2018 - 21:42 IWST

Minister of Industry Airlangga Hartarto (second right) was accompanied by Director General of Metal, Machinery, Transportation and Electronic Equipment (ILMATE) I Gusti Putu Suryawirawan (left) at the opening of Gaikindo Indonesia International Auto
Minister of Industry Airlangga Hartarto (second right) was accompanied by Director General of Metal, Machinery, Transportation and Electronic Equipment (ILMATE) I Gusti Putu Suryawirawan (left) at the opening of Gaikindo Indonesia International Auto

INDUSTRY.co.id - Jakarta - Indonesia's automotive market is expected to remain strong in 2018. Vehicle sales are likely to reach 1.125 million units at 4.6% growth rate.

Among these sectors, commercial vehicles are expected to be at high altitudes, along with significant growth of LCGC and MVP segments.

Viviek Vaidya as Senior Vice President of Frost And Sullivan mobility said long-term factors such as GDP growth rates, good demography and cheap parc per thousand points against strong long-term growth rates. However, we need to focus on specific factors to understand dynamics in 2018.

"The upcoming car launch with new models, facelifts and variants especially for some of the key market models in the MPV Segment is expected to drive sales," said Viviek in Jakarta (16/1/2018).

He added that the commercial vehicle market will continue to be driven by demand in the construction and infrastructure segment. There is a lot of pent-up demand in the commercial vehicle segment.

"Due to production shortage, all demand in 2017 can not be met, the demand for commercial vehicles will soar until 2018," he explained.

Furthermore, Viviek explains, consumer sentiment is expected to remain positive in 2018, primarily due to positive economic outlook, stable exchange rate and lower base lending rate. In fact, the decline in the base rate of credit of 0.5% that occurred in 2017 will likely have a strong impact in 2018.

"Lower credit interest rates will spur demand and the auto sector, and will benefit from good fiscal incentives," Viviek said.

According to him, the only negative factor in 2018 is the pressure to contain fiscal deficits and possible changes in energy prices.

"The fiscal deficit is still in the range of 2.2% of GDP, which can put pressure on tax revenues that encourage tighter compliance and the use of other means to increase tax revenues," he said.

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