Malaysia Narrows Gap with Indonesia as Car Sales Stall

Jakarta, CNBC Indonesia - Financing industry players believe the national automotive market still has room to grow, despite new car sales in Indonesia showing no significant increase over the last two years, even as the country’s population far exceeds that of its neighbours.

New car sales in Indonesia have remained below 1 million units in recent years. Last year, the country nearly lost its lead to Malaysia, which recorded a record 820,732 units, while Indonesia narrowly led with approximately 833,000 units, despite having a much larger population.

‘Over the past two years, four-wheeler sales of new vehicles have only been around 800,000 to 830,000 units. That is still on par with Malaysia, which has a population of only about 35 million,’ said Suwandi Wiratno, Chairman of the Indonesian Financing Companies Association (APPI), on Friday.

Indonesia’s large population should serve as a strong foundation for higher automotive industry growth. Vehicle demand could still increase if economic conditions and public purchasing power continue to improve.

He explained that motor vehicles remain the largest contributor to the financing industry. Vehicle demand is also considered to have a recurring cycle, as consumers tend to replace their vehicles within a certain period.

‘If purchasing power increases, it will definitely go towards motorcycles and cars. Vehicles have a cycle; for example, a new car is usually sold and replaced after five years,’ he said.

Suwandi added that the government is currently striving to boost public consumption through job creation. This move is expected to drive purchasing power while increasing demand for vehicle financing. Given these conditions, the financing industry remains optimistic that the national automotive market still has good long-term prospects.

‘With our large population, we should be able to achieve much better vehicle sales growth,’ he stated.