Indonesian Update

Frost & Sullivan: Indonesia's Passenger Vehicle Sales to Grow at CAGR of 8.6 percent Due to Increased Demand for MPVs, SUVs and Entry of Low-Cost Economical Cars

JAKARTA, Indonesia, Sept. 7 -- Frost & Sullivan expects Indonesia's passenger vehicle sales to increase at a compound annual growth rate (CAGR) of 8.6 percent from 2010 to 2015 due to increased demand for multi-purpose vehicles (MPVs), sports utility vehicles (SUVs) and entry of low-cost economical cars.

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Mr. Vijayendra R Rao, Industry Manager, Automotive & Transportation Practice, Asia Pacific at Frost & Sullivan, said that MPVs and SUVs are expected to continue to be the most popular passenger vehicles in Indonesia during 2010-2015.

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Mr. Rao said that the MPVs low pricing is the key driver of the segment's popularity among consumers. He predicts that MPVs will dominate the market in 2012 due to its low entry level price tag.

He noted that while all other passenger vehicle segments experienced a dip in market share in 2009, MPVs bucked the trend by growing 11.2 percent to 65.2 percent in 2009 as compared to a market share of 54.1 percent in 2008, to be the most popular passenger vehicle segment in Indonesia.

Mr. Rao said that vehicle production in Indonesia is expected to grow at a CAGR of 8 percent during 2010 to 2015 as more vehicle manufacturers are increasing their capacity with encouragement from the government.

Mr. Rao also said that the Indonesian government had recently announced that it is working on a system of incentives and an industrial concept to turn Indonesia into one of Asia's automobile production hubs. "The government plans to implement more regulations that will attract investments in automotive production facilities and reduce import tariffs for completely knocked down (CKD) and completely built unit (CBU) units," he added.

He noted that Indonesia's automotive component exports has grown by 35 to 40 percent annually since 2003, with the major components exports being bumpers, body accessories, mufflers, gearboxes, wheel rims, steering wheels, columns, and drive axles. Indonesia's automotive components are exported mainly to Japan and other ASEAN countries such as Thailand and Malaysia.

Mr. Rao said that Indonesia's total industry volume (TIV) is likely to increase 15% to reach 405,225 by the end of 2010, in tandem with the improved economy and positive consumer sentiment.

Strategic Analysis of Passenger Vehicles Market in Indonesia is part of the Automotive & Transportation Growth Partnership Services program, which also includes research in the following markets: Strategic Analysis of Passenger Vehicles Market in Malaysia, Strategic Analysis of Passenger Vehicles Market in Thailand. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market.