The Transportation Ministry plans to allow auto shops to conduct roadworthiness tests at the request of the Jakarta administration, as more and more drivers register their cars to obtain a roadworthiness certificate required to operate legally under a ride-hailing platform, including Uber and GrabCar. (Antara Photo/Zarqoni Maksum)

Indonesia Auto Sales to Pick Up Despite Slow Start: Fitch


MARCH 18, 2016

Jakarta. Indonesia's auto sales may grow 3 percent to 5 percent this year on the back of an improved economic outlook and lower interest rates that would put more money in the hands of prospective buyers, according to the global ratings agency Fitch Ratings.

Car and motorcycles sales declined 5 percent and 11 percent on an annual basis to 173,000 units and 941,000 units respectively in the January-February period. Still, those were the slowest sales decline since August 2014, Fitch noted, hinting at an imminent rebound.

"Supporting a recovery, Indonesia's economic growth may be boosted by government policies, which include accelerated infrastructure spending," Fitch said in a statement on Friday (18/3).

The economy is expected to grow around 5.2 percent to 5.6 percent this year, up from 4.8 percent growth last year, according to an estimation by Bank Indonesia, the country central bank.

Bank Indonesia has cut its benchmark interest rate by 75 basis points so far to 6.75 percent in March. This, according to Fitch, would support auto loans financing as two-thirds of car purchases in Indonesia are made through loans.

Fitch's outlook matches Gaikindo's 5 percent growth target for 2016. The association previously said that domestic automotive sales will grow to around 1.05 million to 1.1 million units this year from the previous 1.01 million in 2015.

The Indonesian Motorcycles Industry Association (AISI) shared optimism as it expects motorcycle sales to reach 6.5 million units this year, up from 6.48 million units in 2015.