Market Research Reports - Ken Research Passenger and Commercial Vehicles Sales Indonesia

Indonesia Car Finance Market Growth is expected to Driven by Growing Economy and
Favorable Government Regulations: Ken Research
Lower down payment requirements, growth of Fintech companies, increased sale of new and
used cars have aided the demand for car finance in Indonesia.
The report titled “Indonesia Car Finance Market by Type (New and Used Passenger and
Commercial Cars), by Tenure of Loan, by Banks, Captive and Non Captive Institutions -
Outlook to 2021” by Ken Research suggested a robust CAGR of 7.8% in credit disbursement of
the Indonesia car finance market by 2021 with growing new and used car sales and increasing
car finance penetration rate driving the loan disbursement in the future.
Indonesia car finance market is in the growing stage. It is dominated by the unorganized players
as they offer simpler documentation and convenient car finance options. The market has
witnessed increasing use of technology such as simulation tools, online application and
payment methods and others. In order to stimulate the economic growth of the country,
Otoritas Jasa Keuangan (OJK) reduced the down payment requirements in effect increased the
Loan to value ratio in 2015. Indonesian consumers who use credit to purchase a passenger car
need to pay a minimum down payment limit of 25% from 30% in 2014.
Recovery of Indonesian economy, lower financing rates and improved business environment
has positively impacted the consumer confidence index of Indonesia. This has resulted in
increasing number of cars financed by banks and other non financial institutions. Easing
inflation rates and increasing purchasing power has further supported the consumer confidence
index. With the success of new car models by major players in the Indonesia automotive
industry, the number of new cars sold increased by 4.8% in 2016 from 1,013,291 in 2015 to
1,061,859 in 2016. The major players which include Toyota, Honda and Daihatsu have
accounted for 83.6% of the passenger car sales market in 2016. The low cost green car has
witnessed the fastest growth during 2016 which accounted for 20.7% of the total manufactured
cars. Furthermore, Indonesia’s premium gasoline and diesel fuel prices declined by IDR 500 per
liter which is a lagged effect of on sliding international crude oil prices that occurred in Q4-
2015.
Recent times have witnessed rising internet penetration and the use of online portals such as
Carmudi, OLX and Mobil88 for selling used cars which have streamlined this market. There is
more transparency in the market and buyers have a wide variety of brands and models to
choose from the convenience of their home. The used car market sale has increased by 4%
during 2016 from 960,000 in 2015 to 1,000,000 in 2016. This has further augmented the
amount of car loan disbursed in the economy.
Key Topics Covered in the Report: