| SINGAPORE/BANGKOK, April 10
SINGAPORE/BANGKOK, April 10 Indonesia is set to
overtake Thailand as Southeast Asia's biggest car market as
early as this year, driven by an expanding middle class and
growing demand for budget, environmentally friendly vehicles,
company executives and analysts said.
Auto sales in Indonesia, Southeast Asia's largest economy,
grew 17.8 percent in March from a year earlier, led by Toyota
Motor Corp, Daihatsu Motor Co Ltd and
Mitsubishi Motors Corp, data from industry association
Gaikindo showed on Thursday.
This increase is more than double the revised 8.3 percent
year-on-year growth in February, the same month that Thai auto
sales fell 45 percent year-on-year, the most recent data from
the Federation of Thai Industries shows.
Indonesia is set to benefit from companies looking to
diversify their operations away from Thailand, where political
uncertainty and floods have hit domestic demand and worsened its
"Our partners look at two big countries -- Thailand and
Indonesia. It's probably because of the population," Prijono
Sugiarto, chief executive of Indonesia's biggest auto
distributor PT Astra International, told Reuters in a
"Nowadays Indonesia is getting more popular. We are seen as
one of the most potential countries in Southeast Asia," Sugiarto
Domestic consumption accounted for more than half of
Indonesia's economy, which the central bank expects to grow at
between 5.5 and 5.9 percent this year, one of the fastest paces
in Southeast Asia. Indonesia is the world's fourth-most populous
nation, with some 240 million people.
Indonesia's ambitions to be a regional manufacturing hub,
however, could be hampered by its ageing, insufficient
infrastructure and a power supply made unstable by decades of
under-investment and bureaucracy.
Indonesia plans to add up to 60 gigawatts of electricity
capacity to meet demand that is expected to roughly double by
2022, requiring a total of $125.2 billion in investment, an
energy ministry official said last month.
Vehicle sales in Thailand are expected to fall 11.7 per cent
to 1.175 million in 2014 from a year earlier due to the
political turmoil and post-election uncertainties, according to
Frost & Sullivan, a market research and consultancy firm.
Sales in Indonesia, on the other hand, are projected to
increase 6.5 percent to 1.31 million vehicles during the same
Thai auto sales slowed down in the first quarter of 2014,
coinciding with rising concern over political unrest,
particularly in the economic center and capital Bangkok, said
Gustavo Colossi, vice president of sales and marketing for
General Motors' Southeast Asia operations.
"Meanwhile, automotive sales in Indonesia were quite healthy
during the same period, and we expect that will have an overall
positive impact on annual sales in the country and in the
region," Colossi added.
Toyota may reconsider investing up to 20 billion baht ($609
million) in Thailand and could even cut production if the
political unrest drags on, the head of the Japanese automaker's
local unit said in January.
Some automakers, however, are choosing to ride out the slump
in Thailand as they still see long-term growth potential in
Southeast Asia's second largest economy and a nation that is
home to 67 million people.
"The country's rich potential economic growth cannot be
underestimated by a temporary disruption," said Hiroyuki
Yoshimoto, president of Nissan Motor's Thailand
The Japanese carmaker sees Thailand as a strategic regional
base for production as well as research and development, with a
second plant expected to be ready this year.
(Additional reporting by Khettiya Jittapong in BANGKOK and
Rieka Rahadiana in JAKARTA; Editing by Miral Fahmy)