Article Economy & Industry

Growing Middle Class Encourages Automotive Market

JAKARTA— The automotive industry plays an important role in the national economy. In addition to providing transport means to move people and goods, the automotive industry also helps create employment. Ministry of Industry’s data show that the automotive sector provides employment to 1.3 million people. It includes industrial assembly, components, showroom, workshop, and after sales. Not to mention the field of supporting industries, such as finance for credit and insurance.

According to Minister of Industry Mr Saleh Hussein, such condition makes the government to take into account of automotive industry into the future of the industry groups will continue to be developed. One of the strategic programmes that will be done by the government in determining the direction of future development of the automotive industry is to balance competition and import vehicles, particularly in ASEAN. Even the Indonesian government is targeting to make the automotive industry base in the ASEAN region.

Currently Indonesia is the second-largest country of automotive manufacturer in ASEAN after Thailand. Thailand in 2014 produced about 1.9 million vehicles per year, and 50 percent of them were exported. Indonesia has a production capacity of about 1.3 million units per year and is still oriented to the domestic market.
ASEAN Graphic

Market Potential

Domestic market potential of four-wheeled vehicles is basically supported by the population of the middle class. Based on data from AC Nielsen in 2013, the growth rate of middle-class population in ASEAN in 2012-2020 amounted to 110.5 percent. Indonesia even reached 174 percent, the highest among all ASEAN countries. It shows that domestic demand for motor vehicles is likely to increase.

The minister said Indonesia currently has been working hard to catch up with Thailand in the production and export of four-wheeled vehicles. Indonesia also strengthens the competitiveness of the national automotive industry. The goal is to prevent the domestic market from being eroded by imported products, as well as to strengthen Indonesia to become the basis of the automotive industry in ASEAN.