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Indonesia Autos Report Q1 2011
Business Monitor International, Nov 2010, Pages: 39
The Indonesia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's automotive industry.
Indonesia's auto industry is considering adopting the World Forum for Harmonisation of Vehicle Regulations (WP29) global industry standard. BMI believes this would help the country in its bid to become a regional autos hub. The government sees component exports as one of the key opportunities afforded by the standard, and has already nominated four key areas in which the industry would adopt the standard. According to the director-general for transport, telecoms and IT industries at the industry ministry, Budi Darmadi, the government has chosen tyres, seat-belts, automotive glass and noise emissions to be subject to WP29. He says the industry is 'already proficient in producing' these components.
The market is already attracting investment as a hub status. Nissan Motor is planning to double capacity at its production plant in Indonesia. As most of the additional capacity will be for the domestic market rather than for export, the Japanese firm has made assurances it will have no impact on its Thai plant, where it recently began production of small cars for export. Nissan will invest US$20mn to double annual production capacity at its Indonesia plant to 100,000 units by 2013. It hopes the expansion will increase its market share in the country to 10% from around 5-7% at present.
A joint venture (JV) between leading South Korean steel producer Posco and Indonesia's Krakatau Steel is expected to serve the majority of Indonesia's automotive steel demand if completed on schedule in 2014, by which time BMI expects annual vehicle production to be just short of 1mn units. The dominance of Japanese carmakers means that a significant amount of steel is still imported from Japan, which given the current strength of the yen, is increasingly expensive. In H110, total vehicle production was up 65% y-o-y, according to data from the Association of Indonesian Automotive Industries (Gaikindo). But Wawan Hernawan, Krakatau's vice president of corporate communications, says the local steel industry can only provide 40% of the 100,000 tonnes per year required by the auto sector.
Toyota Motor still has a considerable advantage in terms fo the competitive landscape, as it led the market in H110 with sales of 140,184 units, up 77.4%. Toyota benefits from competing in the popular MPV segment with its Avanza and Kijang Innova models, joined by the newly launched Alphard premium MPV. Any potential incentives for hybrid sales would also open the door for its Prius and Auris hybrid models. It also has an interest in the compact segment through its mini car brand Daihatsu, which ranked second overall behind its parent in H110, with sales of 54,573 units, up 58.1%.
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