Sedan Sales in Indonesia Critical, Lowest Score in 2016

oica-moscowJAKARTA— Sales of sedan in Indonesia’s domestic market went into a critical point. During 2009-2016 sedan sales have always been volatile with a downward trend, before finally touching the lowest sales figures in 2016.

GAIKINDO’s data shows, sales of sedans in 2016 only reached 23,323 units. This was the lowest point of sedan sales since 2009. In 2009 sales of sedan still made it to reach 22,100 units, followed with an increase by 33,128 units (2010), dropping to 26,548 units (2011), jumping to 34,221 units (2012), down slightly to 34,193 units (2013), dropping to 2, 614 units (2014), and continuing to slide to 17,422 units (2015).

In the Indonesian car market there are a number of brands who are currently playing in the sedan segment, whether it is produced in Indonesia and imported. They include Audi, BMW, Honda, Mazda, Mercedes-Benz, Peugeot, Subaru, Suzuki, Toyota, Volvo. There are also some luxury brands, among others, Bentley, Ferrari, Lamborghini, Lexus, Porsche. Luxury sedan is not included in the reduction scheme PPnBM. In the past there were more brands that in Indonesia— namely Cadillac, Chevrolet, Chrysler, Citroen, Daihatsu, Fiat, Ford, Holden, Isuzu, Mitsubishi, Moskovich, Nissan, Oldsmobile, Opel, Renault, Volkswagen.

The high price of the sedan is reported to be the main cause of the declining sedan market in Indonesia. The high price was partly triggered by government policies that charge sales tax on luxury goods (PPnBM) for a small sedan. This is mainly for the sedan with engine capacity below 1,500 cc imposed with by 30 percent tax. For comparison, the car tax for category 4 × 2 type (multi-purpose vehicle, MPV) is only 10 percent.

GAIKINDO has for years struggled to seek for sedan PPnBM reduction from the government. To GAIKINDO perception, sedan PPnBM reduction will give strategic significance for Indonesia’s industry and trade. With such reduction, there is hope the Indonesian automotive industry will encourage sedan local production to raise investment, increasing domestic production, and improve exports.

Responding to GAIKINDO to ease sedan PPnBM, the government said it is still waiting. That is, the government still maintains its policy of 40 percent sales tax on luxury sedans. Director General of Metal, Machinery, Transportation Equipment, and Electronic Industry Ministry Mr I Gusti Putu Suryawirawan said the reduction of sales tax on luxury sedan will have an impact on the structure of state tax revenue. At this time the government hopes that GAIKINDO prepares sedan PPnBM reduction scheme.

The government has not yet been quite convinced that such tax reduction will be followed by the increasing car sales. The government wants in-depth study so that later no one would make wrong steps in making a decision. (*)