Industry Trend Analysis - Strengthening Economy And Low Interest Rates To Support Car Sales - APR 2018
BMI View: We forecast new car sales in Indonesia to experience growth of 2.6% in 2018 supported by low and stable interest rates as well as a strengthening economy. That said, sluggish growth in consumer spending will continue to provide headwinds to further growth in car sales.
In 2018, we expect growth in new passenger car sales in Indonesia to accelerate, rising by 2.6% and reaching a total of around 866,174 units by the end of the year. Supporting growth in the new car market will be a low and stable interest rate environment and a strengthening economy. We note, however, that sluggish growth in consumer spending will continue to provide headwinds to further growth in car sales over the year.
Our Country Risk team expects Indonesian economic growth to pick up modestly in 2018, with forecast real GDP growth of 5.3%, up from 5.1% in 2017, driven by an increase in election spending and an acceleration in private investment on the back of an improving business environment ( see 'Growth Recovery Intact But Modest', February 6). In line with rising GDP growth, we expect purchasing power and consumer confidence to strengthen, and thus support growth in auto sales in Indonesia.
|Sales To Begin Rebound In 2018|
|Indonesia - Passenger Car Sales, Units|
|f = BMI forecast. Source: Gaikindo, BMI|