Indonesian Auto Market: Decline in Sales Figures and Upswing in E-Vehicles

In November 2024, the Indonesian vehicle market showed signs of struggle, with new car sales dropping by 12% to 74,347 units compared to 84,390 units the previous year, according to the latest figures from the local automotive industry organization Gaikindo. The weak sales numbers were exacerbated by a decline in market volume from the previous year, following a slowed recovery from pandemic-related drops last year. The overall market sentiment has significantly darkened this year as fewer consumers are willing to make major purchases. Economic growth slightly slowed to 4.95% in the third quarter, down from 5.05% in the previous quarter, driven by higher government spending and steady investment, while private consumption remained unchanged. Bank Indonesia kept its key interest rate at 6.0% in November, following a 25-basis-point cut in October—the first since the start of rate increases in October 2023. Vehicle demand in Indonesia fell by 14% to 784,788 units in the first eleven months of 2024, compared to 920,518 in the same period last year. Passenger vehicle sales fell by 14% to 610,340 units, while commercial vehicle sales declined by 17% to 174,448 units. Toyota reported a sales drop of 14% to 262,315 units year-to-date; Daihatsu reported a 13% decrease to 149,975 units; Honda sold 86,350 units (-34%); Mitsubishi 65,743 units (-8%); and Suzuki 60,087 units (-18%). Total vehicle production in the country dropped by 15% to 1,097,157 units during this eleven-month period, while exports of completely built vehicles fell by 9% to 428,597 units. The association revised its annual sales forecast for 2024 to 850,000 units, down from an initial estimate of 1.1 million units, based on recent market weakness. Encouragingly, sales of battery electric vehicles (BEVs) nearly tripled to 33,945 units year-on-year, even though the November data was yet incomplete. The majority of these sales accounted for Chinese models, led by Wuling with 12,400 units. BYD sold 6,960 BEVs by the end of October, following its market launch in June. Hyundai began selling the locally produced Kona Electric SUV in July, powered by batteries from the local joint venture with LG Energy Solution, and reported 785 units sold so far. Chinese company Hozon Auto started local assembly of its Neta V-II BEV in August, aiming to use 60% local components, and plans to export the model to other right-hand-drive markets in the region. BYD and Vietnamese company VinFast also plan to build BEV assembly plants in the country. At the beginning of the year, the Indonesian government set a sales target of 50,000 BEVs for 2024, after extending the sales tax reduction (from 11% to 1%) until the end of the year to boost demand and attract foreign investments. Additionally, the import duty exemption for BEVs has been suspended until the end of 2025 for companies investing in local production.