In the midst of the existing challenges, Indonesia and Thailand still maintain their position to dominate the ASEAN market. ASEAN automotive sales data in 2014 showed a decrease almost 10%, as the impact of market slowdown in Indonesia and Thailand.
Vehicle sales in Indonesia during 2014 faced pressure. Vehicle sales slowed in each quarter. The fourth quarter of 2014 decreased by 16% (compared to that in the first quarter). This car market decline was due to economic circumstances that put business and consumers in cautious manner.
The increase in the price of fuel posed another factor that put pressure on the automobile market in Indonesia. The 33% increase in fuel prices occurred in November 2014, shortly after Mr Joko Widodo was inaugurated as president of the Republic of Indonesia. The world’s oil prices fell sharply in the last few months in 2014, which drove the Government to slightly lower fuel prices in order to restore the people’s purchasing power. But basically, the trend in fuel price in Indonesia was made to follow the dynamics of world’s fluctuating oil price.
The benchmark rate in 2014 also rose in anticipation of inevitably-surging inflation. Economic growth in 2015 is expected not much different from that in 2014.
With the decline in interest rates that has been enacted, the prospects of the domestic economy and vehicle sales are expected to improve in Indonesia.
According to the Federation of Thai Industries (FTI), vehicle sales in Thailand in 2014 fell by 33.4% to 881,832 units, from 1,325,079 units in 2013. Conditions in 2014 give a less rosy picture for the automotive industry in Thailand. Political upheaval contributed to a decline in the economy to below 1%. Domestic debt and the low prices of agricultural products and commodities also influenced the level of domestic consumption.
Domestic confidence disappeared due to political unrest tapered and culminated with a military coup in May 2014. People’s expenditure was hampered by political and government turmoil. Meanwhile, all the important tourism sectors collapsed due to low tourist arrivals almost all year round.