Indonesia Car Finance Market Growth is expected to Driven by Growing Economy and Favorable Government Regulations: Ken Research

Lower down payment requirements, growth of Fintech companies, increased sale of new and used cars have aided the demand for car finance in Indonesia.

The report titled “Indonesia Car Finance Market by Type (New and Used Passenger and Commercial Cars), by Tenure of Loan, by Banks, Captive and Non Captive Institutions – Outlook to 2021” by Ken Research suggested a robust CAGR of 7.8% in credit disbursement of the Indonesia car finance market by 2021 with growing new and used car sales and increasing car finance penetration rate driving the loan disbursement in the future.

Indonesia car finance market is in the growing stage. It is dominated by the unorganized players as they offer simpler documentation and convenient car finance options. The market has witnessed increasing use of technology such as simulation tools, online application and payment methods and others. In order to stimulate the economic growth of the country, Otoritas Jasa Keuangan (OJK) reduced the down payment requirements in effect increased the Loan to value ratio in 2015. Indonesian consumers who use credit to purchase a passenger car need to pay a minimum down payment limit of 25% from 30% in 2014.

Recovery of Indonesian economy, lower financing rates and improved business environment has positively impacted the consumer confidence index of Indonesia. This has resulted in increasing number of cars financed by banks and other non financial institutions. Easing inflation rates and increasing purchasing power has further supported the consumer confidence index. With the success of new car models by major players in the Indonesia automotive industry, the number of new cars sold increased by 4.8% in 2016 from 1,013,291 in 2015 to 1,061,859 in 2016. The major players which include Toyota, Honda and Daihatsu have accounted for 83.6% of the passenger car sales market in 2016. The low cost green car has witnessed the fastest growth during 2016 which accounted for 20.7% of the total manufactured cars. Furthermore, Indonesia’s premium gasoline and diesel fuel prices declined by IDR 500 per liter which is a lagged effect of on sliding international crude oil prices that occurred in Q4-2015.

Recent times have witnessed rising internet penetration and the use of online portals such as Carmudi, OLX and Mobil88 for selling used cars which have streamlined this market. There is more transparency in the market and buyers have a wide variety of brands and models to choose from the convenience of their home. The used car market sale has increased by 4% during 2016 from 960,000 in 2015 to 1,000,000 in 2016. This has further augmented the amount of car loan disbursed in the economy.

Key Topics Covered in the Report:

Used Car Sales in Indonesia

Top Indonesia Car Loans Banks

Indonesia Average Loan Rate

Auto loan Industry in Indonesia

Used Car Financing in Indonesia

Interest Rate Car Loan in Indonesia

Compare Auto Loans in Indonesia

Used Car Sales in the Indonesia

Vehicle Financing in Indonesia

New Car Sales in Indonesia

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Ken Research

Ankur Gupta, Head Marketing & Communications


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