Indonesia - The Indonesian market for commercial vehicles over 2 tons gvw continued to decline sharply in the fourth quarter of 2023, by 29% to 34,552 units from 48,636 units a year earlier, based on wholesales data from local industry association, Gaikindo,

This followed a similar year-on-year decline in the third quarter, marking the end of the two-year rebound from the pandemic lows. Fourth-quarter economic growth came in at just over 5% year-on-year, helped by a rebound in public spending during the build up to the Presidential elections which took place in mid-February.

Government consumption increased by 2.8% year-on-year in the fourth quarter after declining by 3.9% in the third quarter, while household consumption growth slowed to 4.5% from 5.0% - with the interest rate hikes of the last two years affecting consumer spending. Fixed investment growth also slowed to 5.0% from 5.8%. The central bank kept its benchmark interest rate unchanged at 6% in its last few meetings, having done most of its hiking in 2022 from a low of 3.5%.

Manufacturing output growth slowed to 4.1% year-on-year in the fourth quarter compared with 5.2% in the third quarter; while construction sector activity increased by 7.7% compared with 6.4%; and mining sector output grew by 7.5% versus 7.0%.

External trade contributed positively to GDP, with exports growing by 1.6% in the fourth quarter after a 3.9% decline in the third quarter, while imports were just slightly lower after declining by 6.7%.

Over the full year the Indonesian economy expanded by just over 5%, down from 5.3% in 2022, underpinned by stronger domestic consumption and lifted by a rebound in the country’s travel and tourism sector. The government expects the economy to expand by 5.2% in 2024, supported by buoyant domestic consumption - with sentiment lifted by the recent election.

Market overview

The Indonesian market for commercial vehicles over 2 tons gvw declined by over 10% to 148,151 units last year from 165,624 units in 2022, with a strong first half of year more than offset by a sharp decline in the second half of the year. The strong two-year rebound from the 2020 pandemic lows has clearly run out of steam.

The market last year was driven lower mainly by particularly weak demand for light and medium-duty trucks. Deliveries of commercial vehicles between 2-5 tons gvw fell by almost 23% to 33,526 units, while sales of trucks between 5-16 tons gvw were down by 21% at 51,690 units. Sales of heavy trucks over 16 tons gvw were slightly positive at 26,325 units last year, as demand continued to shift towards heavier vehicles.

The pickup truck market continued to expand last year, by 11% to 30,377 units after surging by 56% to 27,316 units in 2022, reflecting mainly continued strong demand from mining sector earlier in the year. The medium and large bus and coach segment also continued to rebound strongly from the pandemic lockdowns, with sales rising by over 52% to 6,233 units after more than doubling to 4,088 units in 2022.

Indonesia - Sales of commercial vehicles (> 2 tons gvw) by segment, 2023 v 2022

Indonesia – Light / Medium / Heavy duty segment

Pickup truck sales take a dive in Q4 of 2023

The pickup truck segment plunged by 45% to 5,539 units in the fourth quarter of 2023 from 10,077 units year earlier, as the market continued to consolidate after rebounding strongly over a two-year period from the pandemic lows. Full-year sales were still up by over 11% at 30,377 units from 27,316 units in 2022, with strong first-half growth followed by a sharp decline in the second half of the year.

This segment is entirely comprised of models imported as built-up units from Thailand and relies heavily on the country’s mining and plantations sectors, which are driven by international commodity prices. Toyota continued to lead this segment with sales of its Hilux model rising by 22% to 20,211 units, while second-placed Mitsubishi saw sales of its Triton model fall by over 8% to 8,690 units. Isuzu regained some ground with a 16% rise in D-Max sales to 1,474 units.

Indonesia - Sales of pickup trucks, 2023 v 2022

LCV sales tumble at back end of 2023

The Indonesian market for other light commercial vehicles between 2-5 tons gvw declined by 31% to 7,677 units in the fourth quarter of 2023 from 11,074 units a year earlier. Full-year sales were down by 23% at 33,526 units from 43,398 units in 2022, with domestic businesses struggling increasingly with the recent interest rate hikes and slowing household spending.

Only Toyota grew its sales last year, by over 12% to 8,619 units from 7,671 in 2022, reflecting strong demand for its Hiace and Alphard minibuses from the travel and tourism sector. Segment leader Mitsubishi reported a 37% drop in sales of its L300 light truck to 13,527 units, while sales of the Isuzu Traga fell by over 19% to 11,231 units. Both these models are facing tougher competition from the new, slightly upsized Suzuki Carry small truck.

Indonesia - Sales of other LCVs (2-5 tons gvw), 2023 v 2022

Medium-duty truck market shrink by 20%

The market for medium-duty trucks between 5-16 tons gvw continued to shrink in the fourth quarter of 2023, by 32% to 11,926 units after falling by 21% to 17,594 units in same period of last year. After an initial rebound from the pandemic lows, this segment has been in a downtrend – with local business struggling with the recent interest rates hikes. Demand is also shifting in favour of heavier trucks, reflecting improvements in the country’s intercity road networks in recent years.

Full-year sales fell by 21% to 51,690 units after rising by 15% to 65,148 units in 2022. Mitsubishi-Fuso continued to dominate this segment, albeit with sales of its Canter and FM models falling by 20% to 26,906 units, followed by Hino with a 17% drop in combined sales of its Dutro and FG ranges to 12,480 units. Isuzu’s sales fell by 25% to 12,264 units, while UD Trucks saw sales of its Thai-made RKE model plunge by 88% to 40 units.

Indonesia – Sales of medium (5-16t gvw) trucks, 2023 v 2022

Heavy-duty truck segment enjoys steady demand with a modest increase for the year of 2.5%

The market for heavy-duty trucks over 16 tons gvw fell by 16% to 6,453 in the fourth quarter of 2023 from strong year-earlier sales of 7,725 units, after the segment rebounded strongly from the 2020 pandemic lows. Full year sales were still up by just over 2% at 26,325 units after growing by over 66% to 25,674 units in 2022, with a strong first half offset by falling volumes in the second half of the year as growth in international trade and manufacturing slowed.

The data do not include some major European brands such as Volvo, Iveco and Renault, and some Chinese brands, which together account for a significant share of the heavy truck market. It also excludes some trucks sold for off-road mining haulage applications

The segment is dominated by the Japanese, with Hino accounting for almost 53% of total industry volume last year. The company reported a 5% drop in sales to 13,894 units following an 80% surge to 14,579 units in 2022. Isuzu continued to grow its sales last year, by 10% to 3,943 units after volumes more than doubled to 3,579 units in the previous year; while Mitsubishi-Fuso’s sales increased by almost 19% to 3,394 units; and UD Trucks’ sales were 5% higher at 1,759 units after outperforming in 2022.

Mercedes-Benz was the segment’s worst performer last year, with sales of its Axor and Actros models dropping by 19% to 2,035 units, while Scania recovered significant ground with a more than threefold increase to 673 units.

Indonesia – Sales of heavy trucks (over 16 tons gvw), 2023 v 2022

Bus and coach sales triple in two years

The Indonesian market for medium and large buses and coaches continued to recover strongly in 2023 from the Covid lockdowns, driven by a strong rebound in the country’s travel and tourism sector, with sales rising by over 52% to 6,233 units after more than doubling to 4,088 units in 2022. Some Isuzu NLR medium-duty models have been included in this segment, where previously they had been classified as medium-duty trucks.

As a result, Isuzu led this segment last year with sales rising by 77% to 2,239 units, with Hino trailing in second place with sales rising by 120% to 2,152 units – making it the best-performing brand last year. Mitsubishi-Fuso sales were 4% lower at 1,231 units after the company outperformed in the previous year, while Mercedes-Benz saw its sales rise by just 6% to 553 units after also outperforming in 2022.

Regional governments are increasingly looking to switch their public transport fleets to battery power, particularly in major cities such as Jakarta and Surabaya, through buying new purpose-built electric buses and retrofitting existing vehicles with electrified powertrains. This is part of the central government’s long-term plans to reduce carbon emissions, although the transition is still at an early stage.

Indonesia – Sales of buses and coaches, 2023 v 2022