Indonesia expects commercial vehicle rebound, 2019 sales fell 18.3%

24, Jan. 2020

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JAKARTA, NNA – Indonesia’s commercial vehicle (CV) sales in the domestic market declined sharply by 18.3 percent in 2019, according to data released by the Association of Indonesia Automotive Industries (Gaikindo).

Only about 94,000 vehicles were sold last year, down from around 115,000 in 2018.

Confirming the Gaikindo data, PT Hino Motors Sales Indonesia (HMSI) said the poorer performance was driven by factors including the U.S.-China trade war.

“Overall sales of Indonesia commercial vehicles declined in 2019. This was caused by three factors, including the U.S.-China trade war, the presidential election with its new cabinet and policy, and interest rates in Indonesia still considered high even though Bank Indonesia had lowered it four times in 2019,” HMSI Director Yuichi Naito told NNA during a media event in Jakarta on Thursday.

Hino's retail sales fell to 31,471 units in 2019, down from the 40,072 vehicles sold the year before. Despite the decline, the company was happy to report that it remained the market leader for medium-duty trucks, a segment it has dominated in the last 20 years.

On the outlook for 2020, HMSI Sales and Promotion Director Santiko Wardoyo, said, "In 2020, we are optimistic that infrastructure and commodity developments will be better, so we are sure commercial vehicle sales will also improve. Hino's 2020 sales target is to reach 36,000 units," he told reporters.

(File Photo) A Hino Ranger model at Indonesia’s Comprehensive Commercial Vehicle Exhibition (GIICOMVEC) in Jakarta Convention Center, Central Jakarta on March. 1, 2018.
(File Photo) A Hino Ranger model at Indonesia’s Comprehensive Commercial Vehicle Exhibition (GIICOMVEC) in Jakarta Convention Center, Central Jakarta on March. 1, 2018.

Meanwhile, PT Krama Yudha Tiga Berlian Motors (KTB), the official distributor of commercial vehicles from Mitsubishi Fuso Truck and Bus Corp. (MFTBC), also reported that their sales had shrunk.

Mitsubishi Fuso retail sales data for 2019 showed 41,735 units were sold, an 18.4 percent decline from the previous year's 51,132 units.

Dony Hermawan, head of PR and CSR of KTB, said, "2019 was a challenging year, but we managed to maintain our dominance by achieving a 44.2 percent market share amid weak market conditions," he told NNA via text messages on Thursday.

Explaining last year's decline, Hermawan said many business owners held back on spending to “wait and see” because of the uncertain political situation before and after the general elections, even right up to the inauguration of the president and new cabinet.

However, Hermawan is optimistic that the market will rebound in 2020. The market projection of Mitsubishi Fuso’s official distributor is based on key factors such as the continuing infrastructure developments in several regions of Indonesia, he said, adding that there would still be good opportunities in logistics, plantations and mining.

PT Isuzu Astra Motor Indonesia (IAMI) also reported a tough year for commercial vehicles in 2019. Challenges were posed by continuing economic slowdown and a slew of new government regulations and policies, Marketing Communication Advisor Takayoshi Sudo told NNA via email on Jan.13.

Sales of Isuzu commercial vehicles went up only marginally by 0.1 percent to 25,315 units in 2019, from 25,286 units the year before.

On the overall drop in consumption last year, Piter Abdullah, Indonesia's research director for the Center of Reform on Economics, told NNA that the Indonesian economy was strongly influenced by swings in commodity prices. The global turmoil of the last two years caused a fall in commodity prices, which affected many Indonesians who generally depended on sales of commodity products such as coal, crude palm oil (CPO), rubber and cocoa.

"The declining income of Indonesians also caused consumption to be dragged down. This included the demand for vehicles - both passenger and commercial vehicles also declined," the trained economist explained via text messages to NNA on Friday.

However, Piter has predicted that some commodity prices will rebound in 2020, such as CPO, rubber, and nickel. This would encourage consumers to spend slightly more while the demand for motor vehicles would be "automatically better", he said.

"In my opinion, the growth of the automotive industry will be better this year," he added.