Analyzing the Stagnation of the Indonesian Automotive Market and the Role of LCGC

Jakarta –

The Indonesian automotive market is stuck at one million. In order to grow the market, is it necessary to produce new variants under the Low Cost Green Car (LCGC)?

The LCGC program has succeeded in increasing car sales in Indonesia to reach one million units per year. For years, LCGC has always been among the best-selling cars.

The LCGC segment is filled with various brands. Honda has the Brio Satya which is sold for IDR 167.9 million to IDR 198.3 million. It’s not just Honda that sells the LCGC 5-passenger city car, which is close to IDR 200 million. The Toyota Agya is currently sold from IDR 167.9 million to IDR 191.4 million.

The cheapest LCGC now falls on the Daihatsu Ayla which sells for IDR 135 million for the lowest variant. But the car also has various trims, the most expensive price is now IDR 190.9 million.

Next is the 7-seater LCGC which is sold by Daihatsu and Toyota. For this model, the Daihatsu Sigra can now be redeemed for IDR 138 million to IDR 181.6 million. Meanwhile, its twin, the Toyota Calya, is priced at IDR 164.7 million to IDR 173.2 million.

LCGC is known to be the cheapest car segment in Indonesia currently. However, the Indonesian car market shows stagnation at a sales level of around one million per year, even though the car ownership ratio is still around 99 cars per 1,000 population.

The highest car sales in Indonesia occurred in 2013, reaching 1,229,811 units, then continued to decline in the following year but remained at the one million level.

Deputy President Director of PT Toyota Motor Manufacturing Indonesia (TMMIN) Bob Azam said that in order to make cheap cars, don’t sacrifice safety standards.

“Yes, safety is our number one priority, so don’t let us sell cars that are idling. We can also make them, but it will fall off. So there are safety limits,” said Bob when asked about giving birth to a variant under the LCGC.

Moreover, prospective car buyers today are certain to be more technologically literate. Quoting the presentation by LPEM (Institute for Economic and Community Research) FEB UI at GIIAS 2023, current prospective car buyers are those aged 26-41 or born in the 1981-1995 period, known as the millennial generation. Prospective car buyers for the 2025-2030 period are generation Z (Gen Z) who were born between 1995-2010. This is also a challenge for producers, namely adapting to consumer preferences.

“Our vehicles are still dominated by MPVs, but the millennial generation likes to play with gadgets, so this is also a challenge for industry players, their vehicles are getting more sophisticated, in the past maybe when I was still active in operations it was just a power window,” said the General Secretary Kukuh Kumara Motor Vehicle Industry Association (Gaikindo).

Kukuh said he had collaborated with academics to find the root of the problem as to why the domestic automotive market was not developing. However, market growth is related to the country’s economic conditions.

“We are not careless in looking for a solution, now we are studying with LPEM UI, why in a decade there is still one million, so there are many aspects that we are looking at, whether the cars are too expensive, whether other aspects are needed, for example economic growth, the study has not been completed yet, said Kukuh.

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(riar/day)

2024-01-28 00:30:29
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