Automotive Manufacturing Industry Indonesia

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May 12, 2022 – The rapidly increasing uptake of electric vehicles could transform the automotive ecosystem and promote even greater innovations. Domestically, GAIKINDO facilitates its members’ interests in relation with the Government’s policies regarding the automotive industry. This includes policies on industry and trade, energy, tax, safety standards, the use of technology, and environment. In global role, GAIKINDO is a partner of the automotive industry associations in various countries. This is mainly with associations in the countries where automotive industry becomes the backbone of the economy, and in particular with the principal countries whose products enter the Indonesian automotive market. Firstly, Indonesia still has a very low per capita car ownership ratio implying there is enormous scope for growth as there will be many first-time car buyers among Indonesia’s rapidly rising middle class.

Given the widespread understanding that game-changing disruption is already on the horizon, there is still no integrated perspective on how the industry will look in 10 to 15 years as a result of these trends. This correlation between domestic car sales and economic growth is clearly visible in the case of Indonesia. Between the years 2007 and 2012, the Indonesian economy grew at least 6.0 percent per year, with the exception of 2009 when GDP growth was dragged down by the global financial crisis. In the same period, Indonesian car sales climbed rapidly, but also with the exception of 2009 when a steep decline in car sales occurred. In the United States almost all of the producers were assemblers who put together components and parts that were manufactured by separate firms. The assembly technique also lent itself to an advantageous method of financing.

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Attracted by low per capita-car ownership, low labor costs and a rapidly expanding middle class, various global car-makers decided to invest heavily to expand production capacity in Indonesia and may make it their future production hub. Others, such as General Motors have come back to Indonesia to tap this lucrative market. However, Japanese car manufacturers remain the dominant players in Indonesia’s car manufacturing industry, particularly the Toyota brand. It is a very difficult challenge for western brands to compete with their Japanese counterparts in Indonesia, known as the backyard of Japanese car manufacturers. In an era of unprecedented disruption, success depends on automakers’ ability to orchestrate multiple changes, from software-driven transformation to the shift to sustainable mobility and autonomous driving. For commercial vehicles and passenger cars alike, their ability to deal with the many difficult – and interconnected – disruptions they face depends on finding their place in a new global, digital ecosystem.

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Secondly, the popular and affordable low-cost green car is expected to boost sales. Thirdly, the Indonesian government is eagerly trying to speed up infrastructure development across the Indonesian nation. When these LCGC cars were introduced they, generally, had a price tag of around IDR 100 million (approx. USD $7,500) hence being attractive for the country’s large and expanding middle class segment. By early the average price of the LCGC had risen to around IDR 140 million (approx. USD $10,500) per vehicle.

When it comes to challenging developments and innovative process solutions, we’re the right choice. We’re always making new ideas a reality with our polymer systems, and constantly pushing the boundaries of what’s possible. Today’s vehicular data involves a confusing array of formats and interfaces that differ by auto manufacturer. Application vendors are deterred by the cost and challenge of developing and supporting multiple proprietary interfaces to address the necessary range of vehicles.

However, due to robust growth in recent years, Indonesia is expected to somewhat limit the gap with Thailand’s dominant position over the next decade. To overtake Thailand as the biggest car manufacturer in the ASEAN region will, however, require major efforts and breakthroughs. Currently, Indonesia is primarily dependent on foreign direct investment, particularly from Japan, for the establishment of onshore car manufacturing facilities. The country also needs to develop car component industries that support the car manufacturing industry.

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