JAKARTA – National automotive sales have recovered in the second quarter of this year dominated by low-cost green cars (LCGC).
The automotive industry sold 264,000 cars from April to June 2016, 9 per cent more than in the same period of last year according to the Association of Indonesian Automotive Industries (Gaikindo).
Indonesian market leader Astra International sold 146,000 cars in the three-month period, up 16 per cent from the same period in 2015.The company posted sales of Rp 24.8 trillion (US$1.9 billion) in the April-June quarter, down from Rp 25.1 trillion in the same period last year.
Other players also witnessed falling sales, including Suzuki and Nissan’s distributor Indomobil, which booked Rp3.12 trillion in sales in the second quarter this year compared with Rp 3.6 trillion in the same period last year.
The increase of new vehicle units were dominated by low-cost green cars (LCGC) in the second quarter, attracting lower-income buyers hence reducing overall sales.
LCGC was introduced in 2013 after the government had granted tax incentives to those car manufacturers that meet requirements of fuel efficiency targets. This policy was one of the government’s strategies aimed at curbing costly fuel imports amid rising domestic fuel consumption. Initially, prices averaged around IDR 100 – 120 million (approx. USD $8,000) for one LCGC vehicle. Gaikindo targets a production rate of 400,000 LCGCs per year. However, it already signalled that this target cannot be achieved in 2016, partly due to the sluggish macroeconomic context.