Automotive Association To Revise Sales Target Due To Decline Purchasing Power

Wednesday, 23 Oct 2024

The Indonesian Automotive Industry Association (Gaikindo) is considering revising its vehicle sales target for this year due to a decline in consumer purchasing power.

"Consumer purchasing power has indeed diminished significantly, leading to sluggish sales. It appears necessary to adjust the sales projections," said Gaikindo Chairman Jongkie Sugiarto on Friday.

Jongkie emphasized that the considerable reduction in consumer purchasing power has had a direct impact on the slow growth of vehicle sales.

While there has been a minor uptick in sales during the latter half of this year, the overall figures remain relatively low.

He also indicated that the organization plans to reevaluate the vehicle sales target, which was originally set at 1.1 million units by year-end.

However, any decision regarding the adjustment of this target will require further discussion with Gaikindo's members.

"We must first engage in discussions with our members. We will work to ensure that automotive exhibitions, such as GIIAS outside Jakarta and Jakarta Auto Week, can act as catalysts to enhance sales figures," he stated.

Gaikindo Secretary Kukuh Kumara noted that reaching the target of 1.1 million units by the end of the year poses significant challenges, especially with only three months left until December.

Nonetheless, he expressed optimism that various factors could stimulate an increase in car sales in the near term, including the recent reduction in interest rates by the Federal Reserve, which has been reflected by Bank Indonesia.

In September 2024, the Federal Reserve lowered its benchmark interest rate by 50 basis points to a range of 4.75-5 percent. Concurrently, Bank Indonesia has decreased the BI Rate by 25 basis points to 6 percent.

This reduction is anticipated to foster a positive outlook in the motor vehicle market, particularly by facilitating easier access to credit.

"In this context, with interest rates declining for both the Federal Reserve and Bank Indonesia, it is expected that credit accessibility will also improve," he concluded.

Additionally, he mentioned that numerous automotive exhibitions, including the Gaikindo Indonesia International Auto Show (GIIAS) 2024, which will be held in prominent cities such as Tangerang, Surabaya, and Bandung, along with the planned new vehicle launches scheduled until the year's end, are anticipated to draw consumer interest.

"We are optimistic that this will foster a favorable sentiment towards motor vehicle sales," stated Kukuh.

As per Gaikindo data, wholesale car sales from January to August 2024 amounted to 560,619 units, while retail sales for the same timeframe reached 584,879 units.

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