Despite a slow start to the year, the automotive industry remains optimistic that sales will exceed its 20 percent growth target over the year, betting in part on a doubling of the sport utility vehicle (SUV) market.
An SUV is a passenger vehicle that combines the towing capacity of a pickup truck with the capacity to carry five people, plus luggage.
There are currently only two classes of SUV sold in Indonesia -- the mid-range class, with prices ranging from Rp 150 million to Rp 200 million, and the high-end class, with prices above Rp 200 million.
The SUV market here is a niche market, with last year's sales amounting to about 6,000 mid-range SUVs. This is expected to double this year as new players enter the market.
First launched in January, the Toyota Rush had secured 6,000 orders by the end of February.
Jodjana Jody, Toyoto Astra Motor sales general manager, told The Jakarta Post by phone Tuesday that he was optimistic that total sales for mid-range SUVs would exceed the industry target.
"For the Toyota Rush, we already have bookings up until July. We are now trying to boost our production capacity to meet that," he said.
Jody explained that the promising growth of SUV sales was the result of increased purchasing power amid declining lending rates and easing inflation.
Another factor supporting growth was the emergence of new models.
"In our experience, the release of new models always promotes new enthusiasm and, eventually, higher sales," he said.
According to Gunadi Sindhuwinata, the president director of PT Indomobil Sukses International, which distributes nine makes of vehicle, including Suzuki, Audi, Hino, Nissan and Renault, the SUV niche market has existed in Indonesia since the 1980s.
"We actually pioneered the market in the 1980s with our product, the Suzuki Jimny. The SUV was originally a four-wheel drive vehicle that was used off-road.
"But due to its higher gas consumption, we replaced it with a two-wheel drive variant," he said.
Gunadi said that this had to be done as most SUV buyers only used their cars for urban use, rather than for off-road driving.
Moreover, with two-wheel-drive vehicles, taxes are lower than on four-wheel-drive vehicles, which in turn makes SUVs more affordable.
Apart from the affordability issue, Gunadi said that SUVs were favored by the "young and sporty" for the additional features they offered.
"We are aiming at 'young executives' as our main target market, and small families with a little bit of adventure which have only one or two children," he said.
Indomobil's front runner in the mid-range SUV stakes is the newly launched Suzuki Grand Vitara. Sales of the Grand Vitara currently average some 500 units per month.
According to forecasts from the Association of Indonesian Automotive Manufacturers (Gaikindo), total SUV sales will reach 375,000 by the end of the year, around 20 percent higher than last year's record of 318.883.