page_title: Automotive industry in Indonesia
section_title: Characteristics
hierarchical_section_title: Automotive industry in Indonesia / Characteristics
caption_attribution_description: English: The 2015 Toyota Avanza Veloz in maroon red.
context_page_description: The automotive industry in Indonesia plays an important role to the economic growth of the nation, contributing 10.16 percent of the GDP. Indonesia automotive product exports is currently higher in value than their imports. In 2017, Indonesia is the 17th largest passenger vehicle producer in the world and the 5th largest passenger vehicle producer in Asia, producing 0.98 million vehicles.
  Most of the vehicles built in Indonesia are from foreign brands, notably Japanese, and produced in the country through a joint venture plant with a local partner or a fully owned plant. While full manufacturing with a high percentage of local components in the country is usually preferred by manufacturers and encouraged by the government, several plants in the country also conducted a CKD assembly. CBU imports of new cars in the country is also allowed since 1999 with considerably light import tariffs, although it is discouraged by the government.
  Indonesia predominantly produces compact MPVs, SUVs and light pickup trucks under one ton. In 2019, a total 26 percent of its production output was exported.
context_section_description: Traditionally, Indonesia is a market heavily oriented to Japanese cars like most of its Southeast Asian neighbours. However, while other Southeast Asian markets prefer compact sedans, Indonesian car market has a strong preference to three-row MPVs. In 2019, 96.3 percent of cars and trucks sold in Indonesia are from Japanese brands. The percentage is even higher than the proportion of Japanese brands in Japan itself which stood at 90 percent. In the same year, around 550,000 cars or 68 percent of passenger cars sold in Indonesia consists of MPVs, crossovers and SUVs equipped with three rows of seats. The percentage is one of the highest in the world.
  Japanese manufacturer Toyota is leading the market share in Indonesia for decades since the early 80s. Despite that, the largest manufacturer in Indonesia is Daihatsu as several popular Toyota-branded models sold in Indonesia is developed and produced by Daihatsu. The company is wholly owned by Toyota since 2016. The subsidiary, Astra Daihatsu Motor (ADM) operates several plants capable of producing a total 530,000 cars per year. Around 2 out of 5 automobiles sold in Indonesia is produced by ADM.
  Japanese cars was first imported by the government in 1961 as a fleet for cooperative across Indonesia. It was a Toyota Land Cruiser Canvastop. The main reason the Toyota was picked is its low price compared to the nominated Land Rover. At the same year, A.H. Budi, the founder of Nasmoco Toyota dealership network in Central Java bought a Toyopet Tiara from an importer in Jakarta. Impressed by the quality of the car, Budi founded the PT Ratna Dewi Motor Coy to retail Toyota cars.
  Apart from Indonesian consumers wanting a large car to carry the whole family, the popularity of MPVs or three-row cars in general could be explained by the regulations and the car culture that followed after. When the complete ban on car imports on 22 January 1974 by a decree No. 25/74 was imposed, the Indonesian government also imposed a discriminative tax scheme which saw pickup trucks and minibuses with wagon body style free from luxury goods tax, while sedan cars were charged a 100% luxury goods tax. As the result, a sedan is a luxury for most consumers while minibuses enjoyed soaring popularity even when at the time, despite its natural practicality, minibuses are much less comfortable to drive or to ride in. The legacy persists until today, as cars with a sedan body style is still taxed higher than cars with hatchback or wagon body style. As the result, unlike its neighbouring countries in Southeast Asia that prefers mostly compact sedans, Indonesian consumers are predominantly buying three-row MPVs.
  According to GAIKINDO, 82 percent of the national automobile sales in 2018 is contributed by the Java island. In 2017, West Java province contributed 19.6 percent of the national car sales at around 207,000 vehicles, DKI Jakarta at 19.3 percent, and East Java at 13.1 percent.
caption: The Toyota Avanza has been the best selling car in Indonesia consecutively since 2006.
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