Indonesia S Booming Auto Industry And China S Ambitions

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Indonesia’s automotive industry is booming and the Association of Indonesia Automotive Industry (Gaikindo), expects sales to hit 1.1 million units this year.
Observers say the enthusiasm is somewhat driven by attractively priced new models from China.
A visit to the Gaikindo Indonesia International Auto Show (or GIIAS) on press day showed that the Japanese carmakers aren’t taking the Chinese dominance lightly.
Toyota Motor promoted its latest mild and plug-in hybrids. These are popular because they remove the range anxiety associated with EVs.
Its Prius hybrids will be imported as completely built up models, with prices starting at RM200,000 while the RAV4 PHEV is priced from RM330,000.
Edaran Tan Chong which holds the Nissan franchise for Malaysia flew in one of Malaysia’s leading key opinion leaders to present the hybrid e-Power Serena at the show. This range-extender model is priced at RM184,000.
Thirty-five car marques are participating in GIIAS, scheduled to run from July 21-28, with five China brands making their debut.
Like elsewhere in Southeast Asia, Japanese automakers are dominant in Indonesia. Toyota and its subsidiary Daihatsu accounted for over 50% of sales in the first half of this year, followed by Honda and Mitsubishi Motors, according to the industry group.
However, Chinese carmakers have been trying to crack the market recently with their EVs, led by BYD which has upped the stakes by investing in local production.
The biggest Chinese brand in Indonesia is Wuling Motors, which placed ninth with sales of about 3%. Its Wuling Air, a micro EV priced at RM54,000, is popular in Jakarta as a city-runabout.
Indonesia targets to achieve net-zero carbon emissions by 2060, and outgoing president, Joko Widodo, has positioned his nickel-rich country as a hub for EVs and its supply chain.
Nickel is a key material for EV batteries.
Jokowi, as the seventh president of Indonesia is popularly known, has also issued a presidential order calling for PLN, the nation’s public utility, to install EV charger points at as many of its offices and sub-stations as possible.
Presently, Indonesia has about 1,400 charging stations, mostly in urban areas.
Because of the convenience factor, hybrids with their outstanding fuel efficiency have become more attractive to local consumers and have outsold EVs by about 3 times.
According to Gaikindo data for last year, hybrid car sales registered 54,000 units while EVs totalled 17,000 units.
In response to a query about Indonesia’s fuel subsidy, an Indonesia auto boss explained how his country targets diesel subsidies using the Cetane rating. Cetane denotes the grade of diesel, just as RON is the grade for petrol.
“There are three grades of diesel sold in Indonesia, with the lowest and cheapest being cetane 48 diesel, sold for 6,500 rupiah (RM1.90) per litre.
The middle grade fuel is cetane 51 diesel sold for 14,000 rupiah (RM4.03) per litre.
The cleanest is 54 cetane diesel which would be equivalent to Euro 5 with less than 50ppm of sulphur and priced at 15,100 rupiah (RM4.34).
The two lower grades of diesel are mixed with 30 per cent of palm-oil based biodiesel.

While we leave the decision to the car owner to use the expensive clean diesel, the car company will ask the new car buyer to sign a letter stating that if the recommended cetane grade diesel is not used, the engine guarantee will be invalidated, said the Indonesian auto boss.
Owners of old cars which do not require clean diesel can apply for 
program subsidi tepat (targeted subsidy programme) via a smartphone app called MyPertamina. If the owner qualifies for the cheap dirty diesel, the app will generate a QR code that allows the purchase of 120 litres per day.
I wonder how the Indonesian system of targeted subsidies compares to Malaysia’s RM200 per month targeted diesel subsidy.
Put yourself in the shoes of the policymakers who have withdrawn fuel subsidies.
Former Indonesian President Suharto was overthrown and our own former prime minister Abdullah Ahmad Badawi was out of office soon after he increased the price of petrol by a huge amount at one go. - FMT
Yamin Vong can be reached at his Facebook page, yamin.com.my.
The views expressed are those of the writer and do not necessarily reflect those of MMKtT.

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