Indonesian car sales dropped 10.8 percent during 2019 amid the weak demands and other factors - Photo by Carmudi

JAKARTA (TheInsiderStories) – Indonesian car sales dropped 11.54 percent to 90,403 units in August from same month in 2018 of 102,197 units, said the car maker association on Tuesday (09/17). Cumulatively, the car sales during January – August 2019 jumped by 13.5 percent to 660,286 units from the same period in 2018 at 763,444 units.

Publicly listed car producer, PT Astra International Tbk (IDX: ASII) still dominated the market acquired by 52 percent with total sales of 344,216 units. Non-Astra like Mitsubishi, Honda, Suzuki, Nissan and other cars sales sold 316,070 until August.

The association sees this year’ national car sales will not be achieved cause low demand, tight competition, and influx of new players and variants from abroad, such as Chinese’ Wuling, Mitsubishi Xpander, and Nissan.

The association’ chairman Johannes Nangoi still optimistic that the new car sales could reach 1 million units this year caused the political situation getting normal. During the general elections and the affects of trade war make the buyer cautious and hold their plan to buy the car. This discount war has influenced the car market sales in Indonesia.

The association also reported, one of the most recent variants that Indonesian consumers are most like is Wuling. The Chinese car producer’ sales grow 2 percent in the past year. Since launched in February 2019, the manufacturer have sold 980 cars.

According to analysts, car sales still have a change to rise double digits if the economy grow by around 7 percent. They expect that throughout 2019, discount wars will diminish because the producers are beginning to maintain their profit margins.

To support the domestic car sales, the association support the government’ plan to simplify the rules for electric cars (EV) producer, which are considered to be able to open on investment opportunities for the producer.

Last month, Indonesian President Joko Widodo has signed presidential decree on the EV, to prompt investors immediately start the industry.The decree contained a series of incentives such as reduction in import tariffs for machinery and materials and lower luxury taxes for buyers.

The regulation had been under discussion for more than a year, as the president’ intent to pursue cleaner modes of transportation to met the nationalistic resistance and demands for protection of local automakers.

Indonesia aims to become an EV hub for Asia and beyond with a target to start the production in 2022 and share reach 20 percent of total car production by 2025. Some big foreign car maker like Japan’ Toyota Motor Corp., to invest $2 billion and South Korea’ Hyundai Motor would invest and $880 million in the country to develop EVs over the next few years.

Developing the EV industry may take longer time than two or three years as there are many factors, including the market, that need to be considered as prices of electric cars are averagely 40 percent more expensive than regular cars, he said.

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