INDONESIA'S AUTOMOTIVE INDUSTRY ON THE BRINK OF COLLAPSE

Indonesian Commercial Newsletter, June, 1998

Into 1997, the automotive industry showed some vigor after one year of slack domestic demand due to some psychological factor resulting from the entry of the cheap 'national car' Timor. In 1996, the domestic demand for cars dropped by 12.3% to 332,035 units from 378,704 units in 1995. In 1997, it rose by 16.5% to 386,961 units. However, the vigor of the automotive industry was short-lived.

Indonesia's automotive industry is now on the verge of collapse due to the prolonged monetary and economic crisis, whose impact on it began to be visible in September 1997. In 1998, the monthly sales volume of cars averages only 5,000 units as opposed to 30,000 in 1997. For all of 1998, the total sales volume of cars on the domestic market is expected to reach no more than...