Economy & Industry News

The Automotive Industry Has Immediate Impacts on the National Economy

JAKARTA— Pandemic outbreaks due to a kind of virus that spread throughout the world have triggered an impact on the national automotive industry. This can be seen from the decline in demand for cars in Indonesia at the beginning of the year. Director of Maritime Industry, Transportation and Defence Equipment (IMATAP) of the Ministry of Industry Putu Juli Ardika said, car sales in January and February 2020 were affected by the pandemic.

“In January 2020, it was 80.4 thousand units, down 1.1 percent from the previous period. Then in February 2020 it was 79,500 units, down 3.1 percent from the previous period,” he said , Wednesday 8 April 2020

The Indonesian Automotive Industries Association (GAIKINDO) has needed to deliver a correction of the sales target in 2020. GAIKINDO estimates sales of shrinking cars by 50 percent due to falling domestic and foreign demand.

In addition to the declining sales, Putu said another problem faced by the national automotive industry is the lack of supply of raw materials and components. The supply has stalled due to the exporting countries have been implementing lockdown policies in addressing the plague problem. This makes the motor vehicle manufacturing industry is forced to look for alternative sources of raw materials and components to maintain production.

“The disruption of the automotive industry also has an impact on the national economy. The automotive industry has a significant contribution to GDP especially to non-oil and gas GDP of 3.98 percent in 2019, “he said. (*)