Indonesia competes with the Southeast Asian market in Automotive Industry – Part 1

2011 was not a prosperous year for Southeast Asia in addition to the US and Europe. The 2011 second half brought a debt crisis that devoured the whole continent and the most affected area was the export-dependent Southeast Asian countries.

However, two nations out of this sector remained consistent in showing progress, Indonesia and Malaysia. The latter one is not only progressing by the day in exports but also in domestic consumption, one factor that is in dearth in countries with the likes of China.

The country may be the next growth market after China for the automotive industry. While the country boasts Southeast Asia’s largest economy and population, Indonesia’s ratio of car dealership has been among the lowest in the region. Now, analysts say the industry is ready to blossom because of rising incomes, urbanization and a government push to spur demand for low-emission vehicles.

“Indonesia’s auto market is on the verge of a boom,” said Jessada Thongpak, a senior analyst for Southeast Asia at IHS Automotive. “The reason why automakers are looking at Indonesia is because the potential for growth is high, and inflation and interest rates are stable.”

That’s leading carmakers from Detroit-based General Motors (GM) to India’s leading automakers Tata Motors  to gear up to challenge Japanese producers led by Toyota Motors, which control more than 90 percent of a market with the world’s fourth-largest population. Vehicle sales in Indonesia are projected to rise more than 50 percent in five years as the growing working class demands minivans and compact cars.

Count GM, the world’s largest car company, among those taking notice. The maker of Chevrolet, Buick and Cadillac sedans plans to open a minivan factory in Indonesia, where it stopped making vehicles about six years ago. Ford Motors, the second- largest U.S. vehicle manufacturer, said it sees “great potential” in the country.

U.S. automakers aren’t the only ones vying for a slice of the Indonesian market. Tata Motors, for one, is gearing up to challenge Japanese producers. Tata has an assembly plant that builds Xenon pickups in Samutprakan, near Bangkok, according to the company’s website.

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Posted by Usman Khalid on Jan 20 2012. Filed under Automobiles. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.