Indonesia car sales should recover in 2020, association says
28/11/2019 11:20
JAKARTA, Nov 28 (Reuters) - Car sales in Indonesia are
likely to recover next year, but not by much, after plunging
this year during an economic slowdown, an industry association
executive said on Thursday.
The auto industry is an important part of Indonesia's
economy and car sales are often used to gauge private
consumption.
This year, 849,609 cars were sold from January to October
IDCARY=ECI , down 12% from the same period a year earlier.
The automotive industry association Gaikindo has cut its
sales estimate for this year to around 1 million from 1.1
million, co-chairman Jongkie D. Sugiarto said.
"In 2019, there were political campaigns, elections -- for
nearly six months people's concentration was on other things and
they didn't think about buying or changing cars," he said.
The association expects sales to rise by 5% next year, with
economic conditions stable and interest rates lower, he said,
adding that he hopes gross domestic product will grow around 5%.
Indonesia's central bank has trimmed interest rates four
times by a total of 100 basis points this year to counter the
global economic slowdown, measures that eventually will make car
loans cheaper.
This year, GDP growth is set to slow for the first time in
four years to 5.05%, from 5.17% in 2018, according to government
estimates. The government targets 5.3% growth in 2020, though
its targets have rarely been achieved.
Gaikindo's sales outlook is in line with a forecast by Fitch
Solutions, a think tank affiliated with the ratings agency Fitch
Ratings. It foresees sales of 1.07 million cars this year, down
7% from 2018, led by passenger car sales. Its 2020 outlook is
slightly bleaker: 3.4% growth from 2019's level.
"We believe new vehicle sales will face significant pressure
for the rest of 2019 and into early 2020 in Indonesia as a
slowing economy results in used vehicle sales become
increasingly attractive for consumers looking to cut back on
spending," Fitch said in a report this month.
"We however remain confident that Indonesia's automotive
industry will rebound amid measures to stimulate loan growth,
which will feed into higher vehicle sales throughout the year,"
it said.
Indonesia's car market is dominated by Japanese brands, with
Toyota 7203.T and Daihatsu 6023.T leading sales.
(Reporting by Tabita Diela; writing by Gayatri Suroyo; editing
by Larry King)
((tabita.diela@thomsonreuters.com; +622129927621;))