Automotive industry in Indonesia
Indonesia, mainly assembling Japanese brands of vehicles, is the highest producing Southeast Asian automotive producer in January–April 2015 with a market share of 36.54% (363,945 units), while Thailand trails in second place with 25.29%. Since 2012, Indonesian automotive product exports have been higher in value than their imports.
- 1 History
- 2 Government programs
- 3 Associations
- 4 Manufacturers
- 5 Brands
- 6 References
The first motor vehicle to arrive in Indonesia is reported to have been a German Hildebrand & Wolfmüller two-cylinder motorcycle, brought in by Briton John C Potter who was a machinist at the Oemboel Sugar Factory in Probolinggo, East Java. The first car arrived shortly thereafter, an 1894 Benz Viktoria belonging to Pakubuwono X, the Susuhunan of Surakarta.
Local production of automobiles began in 1964, originally with SKD assembly of imported cars and commercial vehicles.
From 1969, the National Plan for Industrial Development was aimed at substituting imports in all areas of manufacture. A series of laws were enacted in the following years to create this situation, affecting passenger cars as well as commercial vehicles. Gradual limitations on CBU vehicle imports were introduced, reaching a complete ban on CBUs by 1974. A localization program commenced with Decree no. 307 of 1976, which led to other decrees designed to minimize its harmful impacts. Beginning in 1980, new rules were also enacted to inhibit the sprawl of brands, with the government limiting local assembly to 71 models of 42 different makes. All assemblers and agents were to be forced into eight separate groups manufacturing everything except engines. Engines were to be supplied by separate corporations. GAAKINDO, made up in large part of small pribumi operations, was opposed to these programs and also had an outspokenly anti-Chinese leader from 1981 to 1984. The companies most in favor of localization were the large Chinese firms like the Liem Group and P.T. Astra Motor.
In 1981, the Government declared that no engine built in Indonesia was to be of less than one liter's displacement by 1985. As a result, manufacturers of local microvans and trucks scrambled to install larger engines. Daihatsu and Suzuki already manufactured suitable engines for other vehicles, but Mitsubishi did not and used a Daihatsu engine for a few years, while Honda withdrew from the mini pick-up/microvan segment. In October 1982 VAT on certain diesel vehicles were raised dramatically. Diesel sedans and station wagons, as well as diesel off-roaders, were hit with a 40 per cent VAT, while light commercial vehicles (Category 1) in the form of small trucks, pickups, and passenger vans received a twenty per cent VAT. Some commentators expected this to spell the end of diesel vehicles in Indonesia.
Low Cost Green Car
In 2007 Indonesia announced a set of tax incentives intended to help develop a "Low Cost Green Car" (LCGC) as an Indonesian people's car. The initial rules required a low price, set lower for villagers, a fuel efficiency of at least 20 km/l (56 mpg‑imp; 47 mpg‑US), and at least 60 percent domestic content. A few projects were shown but none made it to market, and in May 2013 a new set of regulations were issued, meaning a 0% luxury tax for cars under 1200 cc (1500 cc for diesels) as long as they could meet the same 20 km/l mileage goal. The luxury tax is between 50 and 75 percent for larger and less fuel efficient vehicles.
Local manufacture encouraged
From 1969 until 1975, sole agents and assemblers were represented by separate groups, GAM (Gabungan Asembler Mobil) and GAKINDO. In 1972 the government decreed that assemblers and agencies be consolidated and since 1975 the industry was represented by the unified GAAKINDO trade group (Gabungan Agen-agen dan Asembler Kendaraan Bermotor Indonesia, "Association of Indonesia Sole Agents and Automobile Assemblers"). In the first half of the 1980s, GAAKINDO was an outspoken opponent of the government's localization programs. In 1985 the group was reconsolidated into a new organization called GAIKINDO (Gabungan Industri Kendaraan Bermotor Indonesia, "the Association of Indonesia Automotive Industries").
The dominant manufacturer in Indonesia is the Astra International; their products represented around half of the annual vehicle sales in Indonesia in the early 2010s - in large part thanks to the success of the Toyota Kijang.
Most cars sold in Indonesia were originally European in origins; In the 1950s, the most popular cars were Morris and Austin. Japanese imports commenced on a small scale in 1959 with the Mitsubishi Jupiter truck, but by the 1970s this had changed considerably as the Japanese took an ever-growing share of the market. The January 1974 Malari incident started as a protest against Japanese trading practices and included the burning of a Toyota dealership, but sales of Japanese cars reached new heights soon afterwards. By 1980, from 181,100 new registrations, 88.5 percent were Japanese in origin.
Distribution and manufacture
In Indonesia, the import, marketing, distribution, and after sales service rights of foreign brands are usually held by firms called ATPMs (Agen Tunggal Pemegang Merk, or Sole Agent Brand Holder). ATPMs may be foreign or locally owned, with certain differences to their licensing requirements and scope. Foreign firms, for instance, may not sell directly to Indonesian consumers (Agency), although Distribution may be foreign-controlled. ATPMs may carry out the manufacture under license, or contract the manufacture to third parties (subject to approval of the principal), or may simply act as distributors and retailers. In the case of special-bodied vehicles, such as the angkots offered by countless body builders, ATPMs also have relationships with specific companies and often sell their designs through their own showrooms.
NV Spemotri was BMW's main importer of motorcycles during the 1950s; they mainly brought in the 250cc one-cylinder R25, R26, and R27. A handful of BMW 700s were imported to Indonesia by NV Spemotri in the early 1960s; the Salim Group held the import rights until they sold the tiny concession to the Astra Group in the late 1970s. Astra sells BMW through a wholly owned subsidiary called PT Tjahja Sakti Motor. The first BMW to be assembled locally was the 520/4, which was sent CKD and built in Jakarta by PT Indonesia Service Coy. 780 E12 were assembled from 1976 until 1981, with the 520/6 replacing the four-cylinder in 1978. Indonesia Service Coy later built the E28, E30, E36, and E34 models, until assembly was taken over by the PT Gaya Motor company in 1993.
As of April 2001, BMW has their own wholesale company in Indonesia, PT BMW Indonesia, although Astra continues to distribute, import, and assemble BMW automobiles. Assembly is currently of a limited variety of semi-knocked down cars, while the remainder of the range is available CBU.
In the 1970s and 1980s, PT Daihatsu Indonesia were distributing Daihatsus while assembly was carried out by Gaya Motor - both companies were located in Sunter, Jakarta. PT Daihatsu Indonesia was a joint venture between a Japanese holding company (30%) and PT Astra International (70%), while PT Gaya Motor was a joint venture between the Indonesian government, PT Astra International, PT Multi France and PT Multi Astra. Gaya Motor was a general assembler and also built Peugeot and Renault automobiles in the early 1980s. Daihatsu's Hijet was very popular in Indonesia, especially after the larger one-litre engine from the Charade was introduced - one out of eight four-wheeled vehicles built in Indonesia in 1983 was a Hijet.
A variety of General Motors vehicles have been sold in Indonesia, since the early days of the automobile there. General Motors vehicles have been represented in Indonesia since 1915. General Motors established their first local assembly operation (pictured) in Tanjung Priok in February 1927, as "KN Gaya Motor." The location was suitable as there was ample timber nearby, a necessity for car body manufacture at the time. In 1930, the company was renamed "N.V. General Motors Java Handel Maatschappij." Cars from their Jakarta factory were exported all across the region. After having been requisitioned by the Netherlands East Indies government in 1941, on 9 March 1942 all machines and equipment was destroyed to avoid it falling into the hands of the approaching Japanese. Two weeks later the Japanese occupied the plant and interred all foreigners; on 31 December General Motors wrote off the entire enterprise.
In 1946 General Motors Overseas Operations established a Batavia Branch (later renamed "Djakarta Branch") to continue the pre-war activities, building nearly 20,000 vehicles in the next six years. By 1953, activities had mostly ended as Sukarno's pro-Chinese government took power. As of 1954 local partner PN Gaya Motor continued alone; the Indonesian government took over the assets in April 1955. General Motors dissolved this paper operation a year later. The government-run operations did not take good care of the plant and 60 percent of the run-down assets were sold to PT Astra Motor (who, coincientally, had gotten their start by being allowed to import 800 Chevrolet trucks in 1967) in 1969. Astra had expected to sell Chevrolets but were denied the contract and ended up importing Toyotas instead.
A number of other, smaller companies proceeded to import and assemble a variety of General Motors products. Udatimex/Udatin has generally handled Holdens, while Garuda Diesel/Garmak has sold Chevrolets, Opels, and the short-lived Morina national Basic Transportation Vehicle project. In the early 1970s, PT Kali Kuning (Jakarta) also imported Opels, particularly the Rekord. Chevrolet, Holden, Opel, and Isuzu badging have been used, often placed on the same cars by the various importers.
Chevrolet was one of the most popular brands in Indonesia until the 1960s. In particular the 210-series sold well. Later, the Chevrolet badge was mainly used on various Isuzu products like the Chevrolet LUV and Trooper.
At the time of their 1959 introduction to Indonesia (although Holden-built Chevrolets first arrived in 1938) Holdens were sold by Gaya Motor. After gaining some popularity in the 1960s Udatimex (part of Fritz Eman's Udatinda Group in Jakarta) took over in 1970. Another sub-company, PT Udatin, acted as the assembler. From 1954 until 1959, Holden Australia held the General Motors rights to all of Australia and Indonesia. The first Holden to arrive in Indonesia was the FC series. Sales increased considerably when the locally assembled Holden Gemini arrived in 1981. Other locally assembled Holdens were the Torana, Commodore, Statesman, Kingswood, and Premier. In the early 1970s, the HQ Statesman was sold as the "Chevrolet 350" by Garuda Diesel (Chevrolet's sole agent in Indonesia), while the Statesman was sold in parallel by Udatimex.
Garuda also developed an SUV version on the basis of the Isuzu KB, called the Holden Lincah. This was superficially very similar to the Isuzu Trooper, but had locally developed bodywork. A small number of Lincahs were exported to neighboring and Pacific Island countries in the middle of the 1980s. A five-door version of the Lincah was also developed, called the Lincah Gama, but may never have entered production. The Lincah Gama was one of the many cars Malcolm Bricklin planned on importing, following his success with the Yugo. While the Gemini Diesel remained popular with taxi operators, with passenger car sales slowing down Udatimex shut their doors in 1991, and regular imports of Holdens came to an end. The last new Holden introduced in Indonesia was the VL Calais. Even as the Indonesian automobile market has grown rapidly after the Asian Crisis Holden did not return, as GMH's export manager Bob Branson decreed the end of exports to countries with annual sales of less than 500 cars in 2001.
In January 1993 General Motors again began direct local operations as PT General Motor Buana Indonesia (GMBI) was formed, with a plant with 15,000 vehicle capacity in Bekasi, West Java. 60 percent of the company was held by GM, with the remainder belonging to local partner PT Garmak Motor. In 1997 General Motors took full control of the company. The first locally made productof the new company was the Opel Vectra (1994), followed by the Opel Optima and the Opel Blazer in 1995. As of 2002, the Chevrolet nameplate has replaced Opel in Indonesia. Opels had also been very popular before the war, with the Opel P4 being assembled in Tanjung Priok. A locally bodied 7-seater taxibus arrived in 1932; an ambulance version was added in 1933. The taxi model was called Oplet (short for the trade name "Opelette") - a name which was used for share taxis until the type was abolished in 1979.
Mercedes-Benz officially entered Indonesian market in 1970, when PT Star Motors Indonesia (nowaday's PT Mercedes-Benz Distribution Indonesia/MBDI) established together with PT German Motor Manufacturing (nowaday's PT Mercedes-Benz Indonesia) in collaboration with Volkswagen in Tanjung Priok. They have since then become the dominant market leader in premium vehicles in Indonesia. They now locally assembled C Class, GLC Class, E Class, GLE Class, S Class, GLS Class, Axor trucks, and some Mercedes-Benz buses.
Mitsubishi and their long-time local partner PT Mitsubishi Motors Krama Yudha Sales Indonesia (MMKSI) founder PT Krama Yudha Tiga Berlian Motors (KTB) has a long presence in Indonesia, but their first true hit was the Colt T120. This was a locally built version of the first generation Mitsubishi Delica, and from its introduction in the early 1970s it became a seminal vehicle. It was mostly alone in its class and for a generation of Indonesians "Colt" became synonymous with minibus. The T120 was finally discontinued in 1982 and replaced by the L300 (also a Delica); but sales never reached their earlier highs. Mitsubishi finally revived the T120 nametag with a Mitsubishi-engined version of the Suzuki Carry Futura called the Mitsubishi Colt T120SS. This alliance with Suzuki was an attempt to challenge the dominance of the Astra Group's Toyota, Daihatsu, and Isuzu.
PT Suzuki Indomobil Motor is a joint venture between Suzuki Motor Corporation and the Indomobil Group. Until recently, the company was known as PT. Indomobil Suzuki International. The company is located in Jakarta, Indonesia and specialized in manufacturing Suzuki vehicles for the local market. Their first products were the ST10 Carry and Fronte LC20 of 1976. The Carry (soon replaced by the ST20) saw extensive use as an Angkot. Suzuki's first Indonesian activity was in 1970 through its import firm PT. Indohero Steel & Engineering Company. Six years later they had built their manufacturing facility in Jakarta, which is the oldest part of the Indomobil Group. Suzuki's sales rose exponentially in the mid-1980s as sales of minitrucks boomed and the Forsa/Swift was introduced: Suzuki Indonesia sold 13,434 vehicles in 1984, followed by 58,032 in 1985.
Since 2004, Suzuki Indonesia's APV (All Purpose Vehicle) budget MPV has been assembled exclusively in Indonesia. Designed in Japan, it is exported to numerous countries since 2005, to the ASEAN and beyond.It is also available with Mitsubishi badging (as the "Maven").
PT. Toyota Astra Motor (TAM) was founded in April 1971. Vehicle production began in September 1974 at the PT. Multi-Astra manufacturing subsidiary. Toyota Indonesia's most famous product is the Kijang series of light trucks and vans. The Kijang, developed from the Philippine market Tamaraw Revo of 1976, has spawned an entire range of vehicles and is now built in a number of Asian countries including India. The Kijang was one of a series of BUV's, or Basic Utility Vehicles, developed for developing markets by several global manufacturers in the 1960s and 1970s. The Kijang was very successful for Toyota Astra Motor, with the 100,000th example leaving the line in February 1985. Production was almost entirely localized by the mid-eighties, with engine parts as well beginning to be produced in Indonesia by January 1985. The Kijang also caused major upheavals amongst Indonesia's host of small body builders, as the body was built to a whole new standard of quality and was offered directly by Toyota in a number of variants that had hitherto been the purview of the body builders. The success of the Kijang was helpful for TAM as the Crown, Mark II, Land Cruiser, and Corona GL were all struggling in the market place in the first half of the 1980s.
The Land Cruiser dominated the "Jeep" category until the early 1980s, when lighter and more economical competitors began taking away its market share. Unable to compete with the smaller offerings from Suzuki and Daihatsu, Toyota chose to not further increase the local content levels of the Land Cruiser and had withdrawn it from the Indonesian market by 1986. Currently Toyota Astra Motor's production is carried out by PT. Toyota Motor Manufacturing Indonesia (TMMIN), which consists of the erstwhile PT. Multi-Astra as well as PT. Toyota Mobilindo (which was established in December 1976 with production commencing in May 1977).
Toyota and the Astra Group remains dominant in Indonesia, with their market share historically hovering from 35 to 50 percent. They are bigger than the two second biggest brands combined.
Volvo automobiles have been regularly imported to Indonesia since 1971, when Liem Sioe Liong's PT Central Sole Agency gained the concession. By 1975, industrial policy dictated that the cars be assembled locally and Liem responded by creating a joint venture called PT Salim Jaya Motor, operated by his son Albert. They assembled two Volvo models and had a steady market in the form of military and government officials. The venture lost money though, due to the difficulties of collecting money from government officials during the Suharto era. A small number of heavy trucks were also imported. Even with government favor, sales were never very large: between 1976 and 1985, only 1015 Volvo passenger cars (and 201 heavy trucks) were assembled in Indonesia.
The Salim Group still imports Volvo trucks, buses, and construction equipment as of 2017, through a company called PT Indotruck Utama. Since January 2017, Garansindo is the sole importer and distributor of Volvo automobiles in Indonesia.
Volkswagen and their local partner PT Garuda Mataram was a major player until the mid-1970s but sales dropped precipitously in the latter half of the decade. In 1970, Volkswagen entered into a collaboration with Mercedes-Benz Distribution Indonesia to set up a manufacturing line in Tanjung Priok, Jakarta. The resulting company was called PT German Motor Manufacturing, with Garuda Mataram retaining the Volkswagen distribution rights. The partnership was dissolved in 1979 and Volkswagen went their own way. In or just before 1971 Indonesia's Army Strategic Command (Kostrad) took over the local Volkswagen operations as part of a trend of direct government involvement in vehicle manufacturing (and industry in general). Kostrad owned the Volkswagen agency through its Yayasan Dharma Putra business group, in partnership with two Chinese entrepreneurs.
As with Volkswagen in the Philippines, sales dropped precipitously as the Japanese brands took hold. By 1980, the locally developed Mitra project had come to an end as had assembly of the Beetle and the Typ 181 (Camat). Assembly of German-made Kombis and Transporters ended in 1978. Volkswagen replaced this on their Indonesian assembly lines with the Brazilian-made Volkswagen Combi Clipper. This remained Volkswagen's single model on offer in Indonesia until the middle of the 1980s. By 1986, Volkswagens were no longer available in Indonesia, after 13,162 Volkswagens had been assembled between 1976 and 1985.
In 1998 a new company called PT Garuda Mataram Motor was founded as a joint venture between the Volkswagen Group and the Indomobil Group and currently assembles and distributes Volkswagens in Indonesia.
Wuling Motors (Indonesia) is established in August 2015 as a subsidiary of SAIC-GM-Wuling Automobile Company Limited (SGMW) with share composition 50.1 percent of SAIC (Shanghai Automotive International Corporation), 44 percent of GM China and 5.9 percent Guangxi Automobile Group. The company has 60 hectares land in Cikarang, 30 hectares is for the manufacturing and 30 hectares is for supplier park for fast and cheap delivery of the parts.
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