Indonesia Autos Report Q3 2019

Q3 2019
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Indonesia
Aut
utos
os R
Report
eport
Includes 10-year forecasts to 2028
Indonesia Autos Report | Q3 2019
Contents
Key View............................................................................................................................................................................................ 4
SWOT .................................................................................................................................................................................................. 5
Autos SWOT .................................................................................................................................................................................................................................... 5
Industry Forecast........................................................................................................................................................................... 6
Industry Forecast Scenario....................................................................................................................................................................................................... 6
Passenger Vehicles ....................................................................................................................................................................................................................12
Commercial Vehicles ................................................................................................................................................................................................................13
Motorcycles ..................................................................................................................................................................................................................................14
Industry Risk/Reward Index ....................................................................................................................................................15

Asia Autos Production Risk/Reward Index.......................................................................................................................................................................15
Asia Autos Sales Risk/Reward Index ...................................................................................................................................................................................22
Indonesia Autos Production Risk/Reward Index ...........................................................................................................................................................31
Indonesia Autos Sales Risk/Reward Index .......................................................................................................................................................................33
Company Profile...........................................................................................................................................................................35
Suzuki Indomobil Motor ..........................................................................................................................................................................................................35
Toyota Astra Motor ....................................................................................................................................................................................................................36
Regional Overview.......................................................................................................................................................................37
Asia Autos Overview..................................................................................................................................................................................................................37
Indonesia Demographic Outlook............................................................................................................................................40
Autos Methodology.....................................................................................................................................................................43
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Key View
Key View: We maintain our positive outlook for total vehicle sales in Indonesia as economic growth and an expanding construction
sector sustain demand for both passenger and commercial vehicles. We remain upbeat on our motorcycle sales forecast for the
country as high urbanisation drives more people to centres of economic activity while low incomes impede vehicle ownership for a
large number of the Indonesian populace.
Passenger Car And Light Commercial Vehicle Sales

(2018-2028)
f = Fitch Solutions forecast. Source: Gaikindo, Fitch Solutions
Key Views
• We expect strengthening household spending to support growth in new passenger car sales in Indonesia in 2019 as final private
consumption expands driven by expanding economic activity. We forecast new vehicle sales in Indonesia to grow by 6.0% in
2019, reaching a total of around 1.2mn units by the end of 2019.
• Bank Indonesia has adopted a more dovish tone in its recent monetary policy meeting following a weaker-than-expected
economic growth of 5.1% reported in Q119 which we believe will support demand for passenger vehicle sales as financing
conditions support credit expansion resulting in higher economic activity and therefore incomes.
• We believe commercial vehicle sales in Indonesia will remain on an expansion phase as construction activity remains elevated.
We therefore forecast commercial vehicle sales to expand by 14.9% in 2019 and 19.2% in 2020 with an annual growth rate of
12.6% over our 2019-2028 forecast period.
• We believe traffic congestion in Indonesia’s capital, Jakarta, will continue to drive motorbike sales going forward. We therefore
forecast motorbike sales to expand by 4.2% in 2019 with an annual growth rate of 2.3% over our 2019-2028 forecast period
amid cooling demand as the market gets more saturated.
SWOT
Autos SWOT
SWOT Analysis
Strengths • A greater interest from suppliers to invest in the sector will increase localisation.
• Gradual acceleration in construction industry growth will drive demand for commercial vehicles.
• An improving macroeconomic outlook will boost consumer income and spending power.
Weaknesses • Automakers face high operational and logistics risks when doing business in the country.
• Indonesia's physical infrastructure is considered to be sub-standard when compared with regional peers.
Opportunities • Strong autos demand is driving growth in other areas such as Islamic financing.
• The ASEAN Economic Community will see automakers increase their domestic investments to enjoy
economies of scale for their regional exports.
• Indonesia's growing status as an export hub in South East Asia and the under-penetrated domestic market
create ample opportunities for automakers and suppliers.
Threats • A rapid increase in the minimum wage over the past few years could deter some firms from investing in local
manufacturing which remains one of the lowest in the South East Asian region.
• A delay in the expansion of the country's ports could see Indonesia's attractiveness as an auto export hub
diminish.
Industry Forecast
Industry Forecast Scenario
Key View: We believe Indonesia's autos production will continue to expand further in 2019 as growing incomes
prompt automakers to increase production to satisfy demand. This will result in Indonesia maintaining its title as the second largest
automotive manufacturer in the South East Asian region.
AUTOS TOTAL MARKET - HISTORICAL DATA AND FORECASTS (INDONESIA 2018-2028)

Indicator 2018 2019f 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f
Vehicle production, mn 1.34 1.42 1.52 1.62 1.72 1.83 1.95 2.07 2.21 2.35 2.52
Vehicle production, % y-o-y 10.4 5.8 6.6 7.0 6.2 6.3 6.3 6.4 6.5 6.7 6.9
Vehicle sales, mn 1.15 1.22 1.33 1.45 1.56 1.67 1.78 1.87 1.95 2.01 2.07
Vehicle sales, % y-o-y 6.6 6.0 9.2 8.5 8.2 6.6 7.0 5.2 4.0 3.3 2.7
Latest Developments
• Total vehicle sales will expand by 6.0% in 2019 to 1.2mn units as robust economic growth resulted in increased demand.
• We forecast that total vehicle production will expand by 5.8% in 2019 as exports of Indonesian made vehicles perform well,
particularly in the ASEAN countries, and there is robust domestic demand.
• A battery-grade nickel chemicals plant, which will be first of its kind in Indonesia, is being built by Tsingshan Group and multiple
partners. The project is on track to be operational by 2020 awaiting a successful environmental impact assessment. The plant is
based at the PT Indonesia Morowali Industrial Park (IMIP) and is valued at USD700mn. It forms part of Indonesia’s plan to attract
local electric vehicle (EV) manufacturing in the country.
• Indonesia plans to tap into and process its nickel laterite ore, used in lithium batteries, as the country plans to be a regional player
in the nascent global lithium battery value chain.
• The Indonesian government has approached Volvo and Renault about the establishment of EV production in the country as it
plans to produce 700,000 units by 2030.
• Indonesia and Australia recently singed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) on
March 4 2019, which will give Indonesian automotive exports an opportunity to expand into the Australian market which has
very limited domestic vehicle production of its own. The new agreement will grant duty free access to both countries’ exports
which should bode well for Indonesian made vehicles in the Australian market.
Structural Trends
Sales
We forecast new vehicle sales in Indonesia to grow by 6.0% in 2019, reaching a total of around 1.2mn units by the end of 2019.
Breaking this down, we expect a 3.2% expansion in new passenger car sales, while commercial vehicle (CV) sales will outperform,
with forecast growth of 14.9%. We expect strengthening private consumption, helped by the government's election-related
spending, as well as robust construction sector activity to drive growth in sales in the domestic autos market in 2019. That said,
Bank Indonesia's dovish tone in its recent monetary policy meeting points could provide further support for economic expansion
which will bode well for vehicle sales as financing conditions for vehicle loans improve.
Over the long term, we forecast vehicle sales in the country to average annual growth of 6.1% over our 2019-2028 forecast period,
reaching a total of around 2.0mn units by the end of 2028. This growth in new vehicle sales will be supported by strengthening
private consumption, solid levels of fixed investment and continued infrastructure development.
Sales To Accelerate Further In 2019

Indonesia - Vehicle Sales Forecasts By Segment
Strengthening Household Spending To Support Growth In Car Sales
We expect strengthening household spending in Indonesia to support growth in new passenger car sales in Indonesia in 2019 as
incomes are rapidly expanding in the country and we anticipate that to result in an increase in the share of the population that can
afford vehicles. Furthermore, diesel subsidies have been doubled to IDR2,000 and the prices of gasoline and diesel are capped at
IDR6,450 and IDR5,150 respectively. We believe that government subsidy spending will increase over the coming months, especially
as oil prices are likely to continue rising. These subsidies should help to preserve the purchasing power of consumers domestically
and support private consumption growth, which we forecast to grow by 5.2% in 2019 which will be strong enough to translate into
a greater demand for new vehicles.
Rising Incomes To Support Demand For Passenger Vehicles

Indonesia - Gross Income Per Household, USD & Passenger Car Sales
f = Fitch Solutions forecast. Source: IMF, Fitch Solutions
Dovish Bank Indonesia To Spur Growth
Bank Indonesia (BI) has adopted a more dovish tone in its recent monetary policy meeting following a weaker-than-expected
economic growth of 5.1% reported in Q119. While it kept its emphasis on maintaining external stability amid elevated global
uncertainty, BI also recognised that more has to be done to promote economic growth in Indonesia. Our Country Risk team
believes that BI will hold interest rates throughout 2019 which we believe will support demand for passenger vehicle sales intact as
improving financing conditions, particularly vehicle loans, support credit expansion resulting in higher passenger car sales.
Infrastructure Development To Underpin Demand For Commercial Vehicles
We believe commercial vehicle sales in Indonesia will remain on an expansion phase as construction activity remains elevated. We
forecast commercial vehicle sales to expand by 14.9% in 2019 and 19.2% in 2020 with an annual growth rate of 12.6% over our
2019-2028 forecast period.
Indonesia is currently experiencing an infrastructure boom supported by high levels of government expenditure on infrastructure
developments and forming an integral part of China’s Belt and Road Initiative (BRI) plans. Moreover, rapid urbanisation and
industrialisation across Indonesia will support strong growth across the country's residential and non-residential building segment.
Growth in this segment will outperform the wider construction industry growth as investor interest in the market remains robust.
This renders Indonesia’s construction and infrastructure sector as one the bright spots in the Asian region. That said,
our Infrastructure team forecasts Indonesia's construction industry to grow by an annual average of 6.9% between 2019 and 2028,
which highlights the expected increase in demand for commercial vehicles in the construction industry as construction companies
seek to maintain the expansion of their respective supply chains.
However, we highlight that downside risks remain as the balance sheets of several large state-owned enterprises (SOEs) have
deteriorated significantly in recent quarters. This is due to the Jokowi administration increasingly relying on SOEs to deliver its
ambitious USD330bn infrastructure programme. This poses downside risks to Indonesia’s fiscal health as the debt undertaken by
SOEs is a contingent liability for the government.
Commercial Vehicle Sales To Undergo Robust Growth

Indonesia - Commercial Vehicle Sales Forecasts By Segment
Motorbike Sales To Remain On An Expansion Phase
We believe traffic congestion in Indonesia’s capital, Jakarta, will continue to drive motorbike sales going forward. We therefore
forecast motorbike sales to expand by 4.2% in 2019 with an annual growth rate of 2.3% over our 2019-2028 forecast period amid
cooling demand as the market gets more saturated. Indonesia has experienced rapid urbanisation in recent years as high economic
growth rates have enticed more people to move closer to centres of economic activity. A combination of low wages and a
congested city results in motorbikes being a cost effective and efficient means of transport for the local population.
Furthermore, ride-hailing firms such as GrabTaxi Holdings, which use motorbikes for their service, in the transport sector as an
inadequate Indonesian transport infrastructure remains a challenge result in such firms increasingly becoming popular especially in
Indonesia as incomes improve and internet connectivity increases, making in-app purchases more frequent. The move towards
companies such as GrabTaxi will provide further demand going forward. Downside risks to our forecast, however, exist which include
plans to relocate from the capital city, Jakarta, to a new location amid fears of the current one sinking into the ocean and the rapid
infrastructure development currently taking place, especially in the transport sector that will ultimately alleviate congestion
problems the country faces.
Motorbikes To Remain Popular

Indonesia - Motorbike sales,Units
f = Fitch Solutions forecast. Source: AISI, Fitch Solutions
Production
We forecast total vehicle production in Indonesia to grow by 5.8% in 2019, reaching a total of 1.4mn units. Breaking our forecast
down, we forecast a 4.1% expansion in passenger car production, 6.0% growth in LCV production, a 20.4% rise in heavy truck
output and a 24.5% increase in bus and coach output. With domestic auto sales accounting for an average of 80% of total car
output in the Indonesian auto sector, we believe that a positive outlook for domestic demand will support growth in local autos
production. In addition, we expect robust vehicle demand in the key export markets of Thailand and Vietnam to help
support demand for Indonesian-made vehicles.
Postive Outlook For Domestic Production

Indonesia - Vehicle Production Forecasts By Segment

Positive Outlook For Export Markets To Provide Further Tailwinds
We expect robust vehicle demand in Indonesia's South East Asian neighbour markets, Thailand and Vietnam (which accounted for
9.4% and 7.8% market share respectively of Indonesia's finished road vehicle exports in 2017), to provide further support to growth
in vehicle production in the country. In Thailand, we expect strong economic growth and buoyant consumer confidence to drive
growth of 8.6% in Thailand's new vehicle sales in 2019. This will benefit Hyundai, Chevrolet and Datsun, who all export well over
95% of their Indonesian made cars to Thailand. In Vietnam, we forecast vehicle sales to grow 19.9% in 2019 as vehicle importers
and distributors increasingly adjust to government regulations surrounding the quality, technical safety and emissions standards for
automobiles entering the country.
Passenger Vehicles
Key View: We expect strengthening household spending to support growth in new passenger car sales in Indonesia in 2019 as final
private consumption expands driven by increasing economic activity. We forecast passenger vehicle sales in Indonesia to grow by
3.2% in 2019, reaching a total of around 0.9mn units by the end of 2019.
PASSENGER CAR MARKET - HISTORICAL DATA AND FORECASTS (INDONESIA 2017-2028)

Indicator 2017 2018 2019f 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f
Passenger car production, mn 0.98 1.06 1.10 1.17 1.24 1.31 1.40 1.49 1.59 1.70 1.82 1.94
Passenger car production, % y-o-y 1.5 7.5 4.1 6.2 6.3 5.8 6.5 6.6 6.7 6.8 6.9 7.0
Passenger car sales, mn 0.84 0.87 0.90 0.95 1.00 1.04 1.07 1.11 1.15 1.17 1.18 1.17
Passenger car sales, % y-o-y -2.1 3.6 3.2 5.7 4.8 3.9 3.0 4.0 3.3 1.9 0.6 -0.7
Latest Developments And Segment Drivers
• Passenger vehicle sales in Indonesia expanded by 3.6% in 2018 as robust economic growth leading to higher incomes drove
demand.
• We forecast passenger vehicle sales to expand by 3.2% in 2019 as the likelihood of the continuation of generous fuel subsidies
will keep consumer purchasing power elevated and protected from international oil price shocks.
• Passenger vehicle production expanded in 2018 by 7.5% as robust demand from the domestic and regional South East Asian
markets prompted higher production by manufacturers. We expect growth of 4.1% in the production of passenger cars in 2019.
• On April 22 2019, PT Blue Bird Group, a transportation company based in Indonesia, unveiled its fleet of electric vehicles. The
fleet comprises five Tesla Model X 75D cars for high-end clients and 25 BYD e6 cars.
• Indonesia plans to overhaul its luxury vehicle tax scheme from charging consumers on engine capacity to fuel consumption and
carbon emissions in its bid to stimulate the adoption of new energy vehicles in the country.
Commercial Vehicles
Key View: Commercial vehicle sales in Indonesia will continue to expand further in 2019 as the government's generous
infrastructure spending continues to drive demand higher. We forecast an expansion of 14.9% on commercial vehicle sales and this
highlights our bullish outlook for the segment in the country.
COMMERCIAL VEHICLE MARKET - HISTORICAL DATA AND FORECASTS (INDONESIA 2017-2028)

Indicator 2017 2018 2019f 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f
Commercial vehicle production, mn 0.23 0.29 0.32 0.35 0.38 0.41 0.43 0.46 0.48 0.51 0.54 0.57
Commercial vehicles production, % y-o-y 11.9 22.9 12.1 7.8 9.4 7.7 5.8 5.4 5.2 5.7 6.1 6.5
Commercial vehicle sales, mn 0.24 0.28 0.32 0.38 0.45 0.53 0.60 0.67 0.73 0.78 0.84 0.90
Commercial vehicle sales, % y-o-y 17.2 17.6 14.9 19.2 17.7 17.8 13.6 12.3 8.2 7.2 7.4 7.6
• Total commercial vehicle sales grew by 17.6 in 2018. This comprised a 12.2% y-o-y rise in light commercial vehicle sales, a 27.5%
y-o-y expansion in heavy truck sales and a 8.6% y-o-y fall in bus sales over the same period.
• Total commercial vehicle production increased by 22.9% y-o-y in 2018. This comprised a 14.6% y-o-y increase in light
commercial vehicle production, a 36.5% y-o-y rise in heavy truck production and a 35.7% y-o-y.
• We forecast commercial vehicle sales to grow by 15% in 2019 supported by robust construction sector activity, and for
commercial vehicle production to increase by 12.1% as the demand for vehicles in the Asian region continues to grow.
Motorcycles
Key View: We believe traffic congestion in Indonesia’s capital, Jakarta, will continue to drive motorbike sales going forward. We
therefore forecast motorbike sales to expand by 2% in 2019 with an annual growth rate of 2.3% over our 2019-2028 forecast period
amid cooling demand as the market becomes more saturated.
MOTORCYCLE MARKET - HISTORICAL DATA AND FORECASTS (INDONESIA 2018-2028)

Indicator 2018e 2019f 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f
Motorbike production, mn 6.05 6.20 6.34 6.47 6.60 6.71 6.81 6.90 6.97 7.04 7.09
Motorbike production, % y-o-y 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.1 0.9 0.7
Motorbike sales, mn 6.38 6.65 6.90 7.08 7.25 7.41 7.56 7.70 7.82 7.93 8.03
Motorbike sales, % y-o-y 8.4 4.2 3.8 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2
e/f = Fitch Solutions estimate/forecast. Source: AISI, Fitch Solutions
• Motorcycle sales increased by 8.4% y-o-y in 2018 as we anticipate motorcylcles to remain popular as a largely low income urban
population cannot afford passenger cars.
• Motorcycle exports grew by 44.3% in 2018.
• We forecast growth of 4.2% in motorcycle sales in 2019 driven by an uptick in domestic private consumption.
Industry Risk/Reward Index

Asia Autos Production Risk/Reward Index
Key View: In the most recent update of our Autos Production Risk/Reward Index, Asia's overall score has risen slightly from last
quarter, coming in at 57.8 out of a possible 100, compared to 56.5 previously. This consolidates Asia's position as the most attractive
region to begin or maintain autos manufacturing operations globally. Asia still has the highest overall rewards score of all regions
globally in our Autos Production Risk/Reward Index because of the region's high volume vehicle production, healthy competitive
landscape, low labour costs and good manufacturing capabilities in most countries.
Major Markets Still Dominate

Asia - Autos Production Risk/Reward Index Heat Map
Note: Scores out of 100, higher score = more attractive market. Source: Fitch Solutions Autos Production Risk/Reward Index
Main Regional Features And Latest Updates
• In the most recent update of our Autos Production Risk/Reward Index (RRI), Asia's overall score has risen slightly, coming in at
57.8 out of a possible 100, compared to 56.5 previously. As a result, Asia maintains its position as the most attractive region to
begin or maintain autos manufacturing operations globally, above second placed Europe (with a score of 52.7).
• The presence of Asian markets in the top 10 of the global rankings in our Autos Production RRI has increased, with five markets
present compared with four last time as India has joined the top 10. In fact four of the five Asian markets in the top 10 are from
the emerging Asia sub-region, with Thailand, Malaysia, China and India ranking second to fifth respectively. Japan remains the
only developed Asian market in the global top 10.
• Asia still has the highest overall Rewards score out of all regions globally in our Autos Production RRI, and in fact its Rewards
score has risen this quarter to 60.2, up from its previous score of 58.9. These high rewards are due to the region's high volume
vehicle production (overall score of 60.0), healthy competitive landscape (overall score of 66.8), large and cheap labour
force (overall score of 59.6 and 65.2 respectively) and good manufacturing capabilities in most countries (overall score of 66.2).
• The region's Risk score of 54.2 indicates that there are higher risks to negotiate in the region, with low average scores below 50.0
for logistics risk, long term political risk and operational risk.
• Thailand, Malaysia and China remain the top three most attractive markets for automakers looking to begin or maintain autos
manufacturing operations in the region with overall scores of 72.0, 71.5 and 69.3 out of a possible 100 respectively.
• India and Japan have swapped places this quarter with India moving up into fourth place and Japan rounding out the top five.
This is largely due to India's score for vehicle production growth increasing this quarter to 89.3 from 83.9 last quarter. The
country is still winning investment from major vehicle and component producers on the back of its Made in India policy, which is
having a positive impact on its production growth outlook. We forecast total vehicle production growth to average 12% over the
next five years.
High Rewards, Low Risk Region Remains Crowded

Asia - Autos Production Risk/Reward Index
Note: Scores out of 100; higher score = more attractive market; red point = regional average. Source: Fitch Solutions Autos Production Risk/Reward Index
Countries In Asia Congregate In High Reward Region
Around half of the countries that we cover in our Autos Production RRI are in or close to the high reward, low risk section of the
scatter chart (see chart above). India has fallen just into the high reward, high risk section this quarter, but largely due to the regional
average score for risk rising rather than any major deterioration of its own risk score. The number of countries in this most attractive
section of the chart highlights the favourable balance between Asia's Risk and Reward scores, which makes the region the most
attractive region globally. It is also notable that aside from Japan, all of the countries with this most favourable profile are emerging
markets and this reflects their characteristic of offering better growth opportunities than more mature developed states.
High Rewards, Low Risk Sweet Spot Places Asia First

Global - Overall Risk/Rewards Scores
Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions Autos Production Risk/Reward Index
Thailand, India, China and Malaysia offer the most attractive rewards for automakers looking to begin or maintain
manufacturing operations in Asia, with Japan the only developed Asia market in the top five regionally when ranked according to
overall reward potential.
Emerging Asia Markets Leading

Asia - Rewards Score
While emerging Asia countries offer automakers attractive rewards, the sub-region's high operational and political risks act as a drag
on its attractiveness. Emerging Asia gets low overall scores of 31.7 and 35.9 respectively on its short- and long-term political risk
indicators. In addition, the sub-region's high risk operating environment (with an overall score of 31.7), presents challenges to
automakers looking to set up and maintain manufacturing activities in the region.
Trade War Dragging On China's Performance
The trade war between China and the US has had a detrimental effect on China's overall performance in our Autos Production RRI,
as its score weakened from a high of 77.6 to 70.0 this quarter out of a possible 100. Our Country Risk team believes that China faces
a difficult short-term economic outlook as real GDP growth declines due to unwinding credit growth amid efforts by the
government to rein in financial risks as well as the ongoing trade conflict with the US. However, China's economic outlook is still
relatively brighter than many peer emerging market peers due to strong private consumption growth and its external position in
particular remains sound.
Trade War Weighing On China's Overall Attractiveness

China - Autos Production Risk/Reward Index Score
ASIA AUTOS PRODUCTION RISK/REWARD INDEX

Industry Country REWARDS Industry Country RISKS RRI Regional Global
Rewards Rewards Risks Risks Rank Rank
Thailand 79.8 76.8 78.6 72.8 55.7 64.2 72.8 1 2
Malaysia 66.7 77.2 70.9 77.2 67.4 72.3 71.5 2 3
China 72.6 68.3 70.9 70.1 67.4 68.8 70.0 3 4
India 92.9 57.1 78.6 63.8 42.9 53.3 68.5 4 5
Japan 65.2 67.0 65.9 60.3 78.9 69.6 67.4 5 7
South Korea 47.6 70.5 56.8 62.1 82.4 72.2 63.0 6 14
Taiwan 50.3 73.2 59.5 37.5 83.3 60.4 59.8 7 19
Indonesia 68.5 54.0 62.7 60.3 49.0 54.6 59.5 8 21
Philippines 61.0 51.8 57.3 46.9 40.9 43.9 52.0 9 28
Vietnam 55.4 60.7 57.5 22.3 48.4 35.3 48.6 10 32
Pakistan 72.0 29.5 55.0 47.8 7.7 27.8 44.1 11 37
Australia 6.5 53.6 25.4 41.1 79.8 60.4 39.4 12 41
Bangladesh 46.4 38.4 43.2 15.2 27.7 21.4 34.5 13 44
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~
Regional Average 60.4 59.9 60.2 52.1 56.3 54.2 57.8 ~ ~
ASIA AUTOS PRODUCTION REWARDS

Vehicle Production Vehicle Production Competitive Industry Rewards REWARDS
Growth Volume Landscape
Thailand 62.5 83.9 92.9 79.8 78.6
Malaysia 46.4 57.1 96.4 66.7 70.9
China 17.9 100.0 100.0 72.6 70.9
India 89.3 94.6 94.6 92.9 78.6
Japan 30.4 96.4 68.8 65.2 65.9
South Korea 28.6 89.3 25.0 47.6 56.8
Taiwan 35.7 46.4 68.8 50.3 59.5
Indonesia 71.4 75.0 58.9 68.5 62.7
Philippines 82.1 32.1 68.8 61.0 57.3
Vietnam 48.2 39.3 78.6 55.4 57.5
Pakistan 91.1 50.0 75.0 72.0 55.0
Australia 1.8 1.8 16.1 6.5 25.4
Bangladesh 100.0 14.3 25.0 46.4 43.2
Global Average 50.0 50.0 50.0 50.0 50.0
Vehicle Production Vehicle Production Competitive Industry Rewards REWARDS

Growth Volume Landscape
Regional Average 54.3 60.0 66.8 60.4 60.2
Note: Scores out of 100; higher scores = more attractive market. Source: Fitch Solutions Autos Production Risk Reward Index
ASIA AUTOS PRODUCTION REWARDS

Size Of Labour Average Wages/ Cost And Manufacturing Country REWARDS
Force Labour Costs Availability Of Capability Rewards
Utilities
Thailand 73.2 73.2 78.6 82.1 76.8 78.6
Malaysia 60.7 82.1 92.9 73.2 77.2 70.9
China 83.9 46.4 42.9 100.0 68.3 70.9
India 10.7 96.4 41.1 80.4 57.1 78.6
Japan 94.6 16.1 60.7 96.4 67.0 65.9
South Korea 87.5 19.6 82.1 92.9 70.5 56.8
Taiwan 85.7 32.1 91.1 83.9 73.2 59.5
Indonesia 39.3 94.6 19.6 62.5 54.0 62.7
Philippines 35.7 87.5 7.1 76.8 51.8 57.3
Vietnam 78.6 83.9 37.5 42.9 60.7 57.5
Pakistan 1.8 100.0 0.0 16.1 29.5 55.0
Australia 98.2 17.9 58.9 39.3 53.6 25.4
Bangladesh 25.0 98.2 16.1 14.3 38.4 43.2
Global Average 50.0 50.0 50.0 50.0 50.0 50.0
Regional Average 59.6 65.2 48.4 66.2 59.9 60.2
ASIA AUTOS PRODUCTION RISKS

Logistics Risk Strength Of Industry Industry Risks RISKS
Policy
Thailand 64.3 81.3 72.8 55.7
Malaysia 73.2 81.3 77.2 72.3
China 58.9 81.3 70.1 68.1
India 46.4 81.3 63.8 53.3
Japan 78.6 42.0 63.8 53.3
South Korea 82.1 42.0 62.1 82.4
Taiwan 66.1 8.9 37.5 60.4
Indonesia 39.3 81.3 60.3 54.6
Philippines 12.5 81.3 40.9 43.9
Vietnam 35.7 8.9 22.3 35.3
Logistics Risk Strength Of Industry Industry Risks RISKS

Policy
Pakistan 14.3 81.3 47.8 27.8
Australia 62.5 19.6 41.1 60.4
Bangladesh 8.9 21.4 15.2 21.4
Global Average 50.0 50.0 50.0 50.0
Regional Average 49.5 54.7 52.1 57.8
ASIA AUTOS PRODUCTION RISKS

Long-Term Short-Term Long-Term Short-Term Operational Country Risks RISKS
Economic Economic Political Risk Political Risk Risk Index
Risk Index Risk Index Index Index
Thailand 62.5 78.6 25.0 60.7 53.6 55.7 64.2
Malaysia 75.0 83.0 44.6 69.6 66.1 67.4 72.3
China 87.5 83.0 48.2 85.7 50.0 67.4 68.8
India 35.7 57.1 58.9 44.6 30.4 42.9 53.3
Japan 64.3 51.8 87.5 94.6 87.5 78.9 69.6
South Korea 98.2 100.0 76.8 66.1 76.8 82.4 72.2
Taiwan 91.1 98.2 62.5 80.4 83.9 83.3 60.4
Indonesia 55.4 63.4 39.3 64.3 35.7 49.0 54.6
Philippines 69.6 66.1 41.1 33.0 17.9 40.9 43.9
Vietnam 48.2 47.3 26.8 89.3 39.3 48.4 35.3
Pakistan 12.5 8.9 8.9 8.9 3.6 7.7 27.8
Australia 80.4 69.6 91.1 73.2 82.1 79.8 60.4
Bangladesh 41.1 60.7 30.4 19.6 7.1 27.7 21.4
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0
Regional Average 63.2 66.8 49.3 60.8 48.8 56.3 54.2
Please Note: Our Risk/Reward Indices are updated frequently; as a result, scores in this section may not match scores in the rest of
the report.
Asia Autos Sales Risk/Reward Index

Key View: Asia's overall score in this quarter's update of our Auto Sales Risk/Reward Index has decreased slightly to 50.5 out of a
possible 100, down from 51.1 previously. Asia's attractiveness as a vehicle retailing destination lies in the fact that the region boasts
two of the world's largest vehicle markets (notably India and China) as well as having a large, underlying driving-age population for
automakers to tap into. That said, high industry and country risks, particularly in the emerging Asia sub-region, present challenges to
automakers looking to set up and maintain retailing activities in the region.
Australia Retains Its Lead In Our RRI

Asia - Autos Sales Risk/Reward Heat Map
Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions Autos Sales Risk/Reward Index
Main Regional Features And Latest Updates
• Asia's overall score in this quarter's update of our Auto Sales Risk/Reward Index (RRI) has decreased slightly to 50.5 out of a
possible 100, down from 51.1 previously. Despite this, Asia retains its position as the second-highest scoring region globally in
our Autos Sales RRI, although it remains quite some way behind global leader Europe on 61.7.
• Asia's attractiveness as a vehicle retailing destination lies in the fact that the region boasts two of the world's largest vehicle
markets (notably India and China) as well as having a large underlying driving-age population for automakers to tap into.
• A significant point to highlight is that none of the countries that we cover in our Autos Sales RRI for the Asia region appear in the
top 10 ranking on a global basis, as even the strongest performers in the Asia region fail to get a good balance between their
Risks and Rewards scores.
• Overall the Asia region fails to score higher on our RRI due to its underperforming Industry Rewards pillar, which only scores 45.7
out of a possible 100, and lies below the global average of 50.0. This is due to the region's low vehicle ownership levels, scoring
only 41.0 out of a possible 100, as well as the unfavourable competitive landscape (scoring only 33.3 out of a possible 100).
• That said, the region has positive attributes, namely a large driving-age population (66.2), a large vehicle sales volume (60.4) and
relatively low Country Risks (57.7) which highlights the large growth potential in the region once its consumer base starts to
develop.
• Finally, Australia retains its status as the most attractive market to enter and operate vehicle retailing activities in Asia, with a
score of 71.7 out of a possible 100, down slightly from 73.6 previously.
Strong Grouping In The High Rewards, Low Risks Quadrant

Asia - Autos Sales Risk/Reward Index
Note: Scores out of 100; higher score = more attractive market; red point = regional average. Source: Fitch Solutions Autos Sales Risk/Reward Index
High Rewards, Low Risks Grouping Highlights Region's Attractiveness
As indicated in the scatter chart above, 11 out of the 23 countries that we cover in our Autos Sales RRI for the Asia region fall in the
high reward, low risk region of the chart. This indicates that the risks present in the region are well worth undertaking in order to
gain access to the relatively large reward potential, especially in the long term when automakers can benefit from the fast
developing consumer base. We forecast vehicle sales in Asia to grow by 1.7% in 2019, which is just above our global forecast of 1.3%
and a slight acceleration from flat sales in 2018, underlining the region's growth potential.
Asia Presents Strong Long-Term Growth Potential

Asia - Vehicle Sales, units % y-o-y
f = forecast. Source: Fitch Solutions
Asia Presents High Long-Term Growth Opportunities
Emerging Asia countries offer automakers some of the highest growth opportunities both on a regional and global level when
compared to more developed Asian nations, largely due to low base effects and the infancy of new vehicle markets in some of the
countries in this sub-region. This is reflected in the vehicle sales growth indicator, for which three markets score over 90.0 out of a
possible 100, five score over 80.0 and two score over 70.0. All 10 are emerging markets, which aligns with a global trend in our
RRI of emerging markets scoring higher for growth opportunities than their developed counterparts.
Emerging Asia Offers High Growth Opportunties

Asia - Vehicle Sales Growth Indicator Score
Large Populations Improve Long-Term Growth Prospects
We believe that the long-term growth potential for automakers to invest in the region is quite substantial as the region boasts a very
large relatively underdeveloped consumer base, scoring 66.2 for the driving-age population category in our Autos Sales RRI. This
highlights the growth potential for automakers who are willing to contend with the risks present in the region, and that they could
benefit from the increased likelihood of substantial new vehicle sales over the long term. That said, automakers will have some
challenges to overcome in order to monetise the region's large population. Foremost is the fact that the majority of the population
remains rural (scoring 42.7 for the urban/rural split category) and therefore will be tough to access in order to benefit from a large
portion of the population. However, the population is quickly becoming more urbanised, which further improves the long-term
attractiveness of the region.
Elevated Risks Weigh On Emerging Markets Appeal
While emerging Asia offers automakers high growth opportunities, the region's high Industry Risks and Country Risks act as a drag
on its attractiveness. Emerging Asia gets low scores on the Industry Risk and Country Risk pillars of our RRI. This is largely down to
the sub-region's high risk operating environment (score of 35.1), uncertain long-term political outlook (score of 37.5), unfavourable
regulatory environment (score of 39.4) as well as the elevated tax burden faced by consumers when it comes to making vehicle
purchases (score of 18.6). These will present challenges to automakers looking to set up and maintain retailing activities in the
region.
ASIA AUTOS SALES RISK/REWARD INDEX

Industry Country REWARDS Industry Country RISKS RRI Regional Global
Rewards Rewards Risks Risks Rank Rank
Australia 66.3 73.5 69.2 68.5 82.3 75.4 71.7 1 16
Japan 53.2 92.1 68.8 69.6 81.7 75.7 71.5 2 17
New Zealand 67.3 65.6 66.7 66.1 91.0 78.6 71.4 3 19
South Korea 48.4 84.0 62.6 67.7 85.5 76.6 68.2 4 26
Singapore 35.4 79.8 53.1 83.3 88.9 86.1 66.3 5 32
Taiwan 48.4 75.5 59.2 57.3 84.8 71.0 64.0 6 34
China 63.5 68.7 65.6 42.2 72.7 57.5 62.3 7 38
Thailand 64.9 57.7 62.0 49.5 62.1 55.8 59.5 8 41
Hong Kong 27.4 83.0 49.6 59.9 84.8 72.4 58.7 9 46
Malaysia 55.2 64.0 58.8 40.3 72.3 56.3 57.8 10 48
Macau 46.8 65.4 54.2 60.3 58.6 59.7 56.4 11 50
Vietnam 56.3 44.4 51.5 58.3 59.1 58.7 54.4 12 54
Indonesia 61.9 50.2 57.2 32.8 59.1 46.0 52.7 13 57
India 54.8 45.2 51.0 45.4 56.9 51.2 51.1 14 59
Philippines 50.4 35.5 44.4 50.3 53.6 51.9 47.4 15 72
Brunei 34.3 47.1 39.4 47.3 56.3 51.8 44.4 16 77
Sri Lanka 43.1 39.7 41.8 25.3 41.9 33.6 38.5 17 91
Laos 49.4 16.6 36.3 47.0 27.6 37.3 36.7 18 93
Bangladesh 30.4 35.3 32.4 32.0 42.6 37.3 34.4 19 97
Myanmar 26.2 27.6 26.8 53.2 17.0 35.1 30.1 20 104
Pakistan 33.3 35.6 34.2 24.5 17.5 21.0 28.9 21 106
Cambodia 21.6 22.1 21.8 40.7 26.9 33.8 36.6 22 113
Afghanistan 11.4 14.7 12.7 2.2 4.4 3.3 8.9 23 125
Global 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~

Average
Regional 45.7 53.2 48.7 48.9 57.7 53.3 50.5 ~ ~

Average
ASIA AUTOS SALES REWARDS

Vehicle Sales Vehicle Vehicle Sales Competitive Industry REWARDS
Volume, Units Ownership, Per Growth Landscape Rewards
1,000 People
Australia 86.3 91.1 29.8 58.1 66.3 69.2
Japan 97.6 84.7 3.2 27.4 53.2 68.8
New Zealand 64.5 93.5 35.5 75.8 67.3 66.7
South Korea 89.5 71.0 8.9 24.2 48.4 62.6
Singapore 37.1 37.5 0.0 66.9 35.4 53.1
Taiwan 68.5 59.7 23.4 41.9 48.4 59.2
China 100.0 42.7 16.9 94.4 63.5 65.6
Thailand 87.9 54.8 83.9 33.1 64.9 62.0
Hong Kong 24.2 23.4 1.6 60.5 27.4 49.6
Malaysia 83.1 76.6 39.5 21.8 55.2 58.8
Macau 10.5 36.3 94.4 46.0 46.8 54.2
Vietnam 79.0 12.1 99.2 34.7 56.3 51.5
Indonesia 88.7 53.2 85.5 20.2 61.9 57.2
India 98.4 11.3 95.2 14.5 54.8 51.0
Philippines 78.2 14.5 89.5 19.4 50.4 44.4
Brunei 11.3 87.9 9.7 28.2 34.3 39.4
Sri Lanka 57.3 26.6 84.7 4.0 43.1 41.8
Laos 59.7 24.2 88.7 25.0 49.4 36.3
Bangladesh 46.8 1.6 70.2 3.2 30.4 32.4
Myanmar 3.2 4.8 73.4 23.4 26.2 26.8
Pakistan 71.8 6.5 52.4 2.4 33.3 34.2
Cambodia 29.8 15.3 0.8 40.3 21.6 21.8
Afghanistan 15.3 12.9 15.7 1.6 11.4 12.7
Global Average 50.0 50.0 50.0 50.0 50.0 50.0
Regional Average 60.4 41.0 47.9 33.5 45.7 48.7
AUTOS SALES REWARDS

Driving-Age GDP Per Urban/Rural Spending Quality And Country REWARDS
Population Capita, USD Split Population, % Extent Of Rewards
Of Total Transport
Network
Australia 64.5 90.3 78.2 58.1 76.6 73.5 69.2
Japan 93.5 80.6 89.5 99.2 97.6 92.1 68.8
New Zealand 24.2 81.5 79.0 57.3 86.3 65.6 66.7
South Korea 82.3 77.4 71.8 96.0 92.7 84.0 62.6
Singapore 34.7 91.9 98.8 83.1 90.3 79.8 53.1
Taiwan 66.1 71.8 65.3 95.2 79.0 75.5 59.2
China 100.0 55.6 37.1 67.7 83.1 68.7 65.6
Thailand 85.5 46.8 21.0 69.4 66.1 57.7 62.0
Hong Kong 39.5 87.1 98.8 100.0 89.5 83.0 49.6
Malaysia 71.8 56.5 62.9 41.9 87.1 64.0 58.8
Macau 5.6 99.2 98.8 92.7 30.6 65.4 54.2
Vietnam 91.1 19.4 12.9 47.6 50.8 44.4 51.5
Indonesia 97.6 30.6 29.0 33.9 59.7 50.2 57.2
India 99.2 16.9 8.1 29.0 72.6 45.2 51.0
Philippines 89.5 26.6 16.9 19.4 25.0 35.5 44.4
Brunei 0.8 72.6 64.5 49.2 48.4 47.1 39.4
Sri Lanka 60.5 28.2 0.8 44.4 64.5 39.7 41.8
Laos 29.0 21.8 10.5 18.5 3.2 16.6 36.3
Bangladesh 94.4 14.5 13.7 27.4 26.6 35.3 32.4
Myanmar 79.8 7.3 6.5 37.9 6.5 27.6 26.8
Pakistan 96.0 6.5 11.3 16.9 47.6 35.6 34.2
Cambodia 53.2 11.3 2.4 21.8 21.8 22.1 21.8
Afghanistan 63.7 0.0 4.0 5.6 0.0 14.7 12.7
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0
AUTOS SALES RISKS

Regulatory New Sales As % Of Tax Rates Industry Risks RISKS
Environment Fleet
Australia 50.8 68.5 86.3 68.5 75.4
Japan 43.5 72.6 92.7 69.6 75.7
New Zealand 56.5 50.8 91.1 66.1 78.6
South Korea 63.7 66.1 73.4 67.7 76.6
Singapore 97.6 74.2 78.2 83.3 86.1
Taiwan 66.1 21.8 83.9 57.3 71.0
China 32.3 88.7 5.6 42.2 57.5
Thailand 79.0 67.7 1.6 49.5 55.8
Hong Kong 96.8 39.5 43.5 59.9 72.4
Malaysia 80.6 30.6 9.7 40.3 56.3
Macau 71.8 79.8 30.6 60.8 59.7
Vietnam 79.8 91.9 3.2 58.3 58.7
Indonesia 41.1 50.0 7.3 32.8 46.0
India 45.2 90.3 0.8 45.4 51.2
Philippines 36.3 83.1 31.5 50.3 51.9
Brunei 24.2 32.3 85.5 47.3 51.8
Sri Lanka 15.3 60.5 0.0 25.3 33.6
Laos 20.2 96.8 24.2 47.0 37.3
Bangladesh 7.3 76.6 12.1 32.0 37.3
Myanmar 14.5 95.2 50.0 53.2 35.1
Pakistan 16.9 33.1 23.4 24.5 21.0
Cambodia 67.3 46.8 8.1 40.7 33.8
Afghanistan 0.0 2.4 4.0 2.2 3.3
Global Average 50.0 50.0 50.0 50.0 50.0
Regional Average 48.1 61.7 36.8 48.9 53.3
AUTOS SALES RISKS

Long-Term Short-Term Long-Term Short-Term Operational Country Risks RISKS
Economic Economic Political Risk Political Risk Risk Index
Risk Index Risk Index Index Index
Australia 84.7 75.8 92.7 72.6 85.5 82.3 75.4
Japan 74.2 64.9 89.5 91.9 87.9 81.7 75.7
New Zealand 91.1 93.1 87.9 88.7 94.4 91.0 78.6
South Korea 97.6 98.4 82.3 66.1 83.1 85.5 76.6
Singapore 78.2 85.5 80.6 100.0 100.0 88.9 86.1
Taiwan 92.7 97.6 71.8 75.8 86.3 84.8 71.0
China 89.5 84.3 52.8 80.6 56.5 72.7 57.5
Thailand 72.6 82.3 33.9 61.3 60.5 62.1 55.8
Hong Kong 85.5 93.1 63.7 82.7 99.2 84.8 72.4
Malaysia 81.5 84.3 50.8 70.2 75.0 72.3 56.3
Macau 39.5 59.3 49.2 79.8 65.3 58.6 59.7
Vietnam 62.9 62.5 34.7 87.1 48.4 59.1 58.7
Indonesia 68.5 72.2 45.2 64.5 45.2 59.1 46.0
India 56.5 67.7 69.4 50.0 41.1 56.9 51.2
Philippines 77.0 74.2 46.8 41.9 28.2 53.6 51.9
Brunei 37.9 34.7 50.0 96.0 62.9 56.3 51.8
Sri Lanka 43.5 40.3 46.0 40.3 39.5 41.9 33.6
Laos 7.3 4.8 27.4 81.5 16.9 27.6 37.3
Bangladesh 59.7 70.2 37.1 26.6 19.4 42.6 37.3
Myanmar 21.0 21.0 6.5 27.8 8.9 17.0 35.1
Pakistan 27.4 19.0 16.9 13.7 10.5 17.5 21.0
Cambodia 20.2 21.0 29.8 38.7 25.0 26.9 33.8
Afghanistan 5.6 10.5 0.8 4.0 0.8 4.4 3.3
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0
Please Note: Our Risk/Reward Indices are updated frequently; as a result, scores in this section may not match scores in the rest of
the report.
Indonesia Autos Production Risk/Reward Index

Key View: In the most recent update of our Autos Production Risk/Reward Index (RRI), Indonesia's score has strengthened to
59.5 out of a possible 100, down from its previous score of 56.6 as labour costs and vehicle production volumes increase the appeal
of Indonesia as an automotive manufacturing hub. However, risks remain as the long-term political outlook remains uncertain due
to the presence of separatist movements in the country's vast territory.
Low Labour Costs And Policy Certainty Increases Appeal

Indonesia & Asia Region - Autos Production Risk/Reward Index By Component
Indonesia Autos Production RRI - Global And Regional Ranking
• Regional rank (out of 13): 8th

• Global rank (out of 57): 21th
High Rewards Moderate Risk

Indoneisa & Asia Region - Autos Production Risk/Reward Scores
Key Features And Latest Updates
• In the most recent update of our Autos Production Risk/Reward Index (RRI), Indonesia's score has strengthened to 59.5 out of a
possible 100, down from its previous score of 56.6. That said, its overall score comes in marginally ahead of the Asia regional
average of 57.8. This means that the country still ranks in the top 10 most attractive destinations for automakers to begin or
maintain vehicle manufacturing in the region.
• Indonesia's key strengths remain its low costs of labour as reflected in the average wages/labour cost score (94.6) and strong
automotive industry policy (81.3).
• Indonesia also benefits from its large scale vehicle production volumes (based on our five-year average forecast), scoring 75.0 on
this indicator, above the Asia regional average of 60.0.
• Indonesia provides attractive growth opportunities for new/existing automakers, getting a score of 71.4 out of a possible 100 on
its vehicle production growth indicator (which is also based on our five-year average forecast). This score comes in higher than
the Asia average regional score of 54.3 on the same indicator.
• Indonesia's attractiveness as an autos production destination is weighed down by the small size of its labour force (39.3) and
higher logistics risks (39.3) when compared to its regional peers. The country also suffers from an uncertain long-term political
environment due to the presence of separatists groups that weigh on the government's control of the country's territory,
scoring 39.3, as well as high operational risks (35.7).
Indonesia Autos Sales Risk/Reward Index

Key View: In the most recent update of our Autos Sales RRI, Indonesia's overall score has increased to 52.7 out of a possible 100,
compared to 51.0 previously. The country boasts a large driving-age population along with high vehicle sales growth levels.
However, risks remain high as reflected by low scores in our Industry Risk pillar of our RRI.
High Vehicle Sales Volume And A Large Population Improves Attractiveness

Indonesia & Asia Region - Autos Sales Risk/Reward Index By Component
Note: Scores out of 100; higher score = more attractive market; Q&E = quality and extent. Source: Fitch Solutions Autos Sales Risk/Reward Index
Indonesia Autos Sales RRI - Global And Regional Ranks
• Regional rank (out of 23): 13th

• Global rank (out of 125): 57th
High Risk Appetite Required For Indonesia

Indonesia & Regional Average - Risk & Reward Scores
Key Features And Latest Updates
• In the most recent update of our Autos Sales Risk/Reward Index (RRI), Indonesia's overall score has increased to 52.7 out of a
possible 100, compared to 51.0 previously. Indonesia's overall score continues to outperform the Asia regional average score of
50.5, placing the country in 13th place out of 23 countries in the region.
• Indonesia's key strengths lie in its high volume vehicle market, represented in its strong score of 88.7 on its vehicle sales
volume indicator (which is based on our five-year average forecast), as well as its large underlying potential consumer base, as
seen in its high score of 97.6 on its driving-age population indicator.
• Weighing on Indonesia's attractiveness is its large rural population and low income profile. This is reflected in its poor scores of
27.4, 29.0 and 33.9 on its GDP per capita, urban/rural split and spending population indicators.
• Indonesia also gets poor scores of 50.0 and 7.3 on its new sales as a percentage of fleet and tax rates indicators, suggesting a
dominant second-hand vehicle market and high tax burden on consumers looking to buy vehicles. Furthermore, the country
also suffers from an unfavourable regulatory environment (41.1), indicating a challenging environment for automakers to
operate in.
Company Profile
Suzuki Indomobil Motor
Latest Developments
• Suzuki's total vehicle sales in Indonesia were up 5.7% y-o-y in 2018, totalling 118,014 units, while Suzuki's total production
increased by 15.3% y-o-y over the same period.
• Suzuki's exports fell 12.6% y-o-y in 2018, to just 24,924 units.
• Suzuki's market share in 2018 stood at 10.3%, placing the company in fifth place.
• Suzuki has unveiled the new Carry model, a light commercial vehicle for the Indonesian market in April 2019.
Strategy
Suzuki opened a new USD1bn manufacturing plant in Deltamas, West Java, in May 2015. The new plant comprises engine and
transmission production facilities and a final assembly line. The factory has the capacity to produce 106,000 cars annually, and
produces the Suzuki Ertiga multipurpose van for the domestic market as well as export markets including Thailand and Brunei. The
plant also produces the Ertiga's 1.4 litre engine and the Karimun Wagon R van's 1.0 litre engine, in addition to car transmissions for
Indonesia, Thailand and Pakistan.
Suzuki's sales network strategy in 2016 was to improve and expand the scope of sales and business in Indonesia. The company
added around 12 outlets and expanded its network coverage to five more districts in the country, where in 2015 the total sales
network was in 176 districts.
Suzuki's new USD1bn manufacturing plant in Deltamas, West Java, forms part of the company's USD1.3bn investment in Indonesia
over the 2015-2017 period. The aim is to use Indonesia as part of its global supply chain, and this will provide more labour and
export participation to the country.
Toyota Astra Motor
Latest Developments
• Toyota new vehicle sales fell 5.2% y-o-y in 2018, and its vehicle production also contracted by 3.8% y-o-y.
• Toyota's vehicle exports contracted by 23.4% y-o-y in 2018 as key export markets' demand for vehicles slow down due to the
increased global trade uncertainty.
• Toyota was the market leader in 2018, with a market share of 30.6%.
Strategy
Built with an investment of JPY23bn (USD232mn), the new Karawang engine plant is part of Toyota's plans to use Indonesia as its
alternative South East Asia export hub. The plant, which commenced operations in March 2016, will produce 216,000 units
annually. The new facility will produce 1.3 litre and 1.5 litre NR engines, some of which will be exported to markets such as India,
Japan, Malaysia, the Philippines, Thailand and Vietnam.
The Karawang engine plant is part of the company's goal to minimise the negative impacts on downstream processes, and thus
enable the inclusion of all steps of the manufacturing process in the same plant. The Karawang facility also produces the Kijang
Innova, Fortuner, Etios Valco, Vios and Yaris.
Regional Overview
Asia Autos Overview
Key View
• Investment into EVs will continue spreading to more markets than just China as regulatory deadlines draw nearer.
• There is still room for growth in production of passenger cars in markets where car ownership is still low, such as India and
Pakistan.
• New technology and consumer preference is creating opportunities for new investment in South Korea where production has
been falling in recent years.
In our regular round-up of production investments, we track the latest projects from the production side of the industry and analyse
regional trends that we see developing. In doing so, we hope to build a picture of any potential hubs that may be developing, as well
as company strategy in terms of production bases and export programmes.
ASIA AUTOS PRODUCTION INVESTMENT

Date City/State/ Date
Country Company Value Brief Description
Announced Region Onstream
New plant for production of

JPY60bn
Jan-19 India Gujarat Suzuki passenger cars with an annual 2020
(USD547mn)
production capacity of 250,000 units
KRW1.2trn Expansion of two existing battery

Jan-19 China Nanjing LG Chem 2020
(USD1.07bn) plants to meet increased demand
New joint venture to produce and sell

CNY1bn
Jan-19 China na Geely and CATL lithium-ion battery cells, modules na
(USD145mn)
and packs
INR70bn New plant for production of electric

Jan-19 India Tamil Nadu Hyundai 2021
(USD980mn) cars, creating 1,500 new jobs
New plant for production of heavy

JPY11.5bn trucks, initially for the domestic
Feb-19 Thailand Samutprakarn Hino 2021
(USD103.1mn) market and spreading to ASEAN
markets from around 2024
New plant for production of trucks,

THB800mn
Feb-19 Thailand Bangkok Scania buses and truck cabs to global 2019
(USD25mn)
specifications
New plant in co-operation with

AVTEC for production of Citroen
INR6bn branded passenger cars and engines,
Feb-19 India Tamil Nadu Groupe PSA 2021
(USD86.5mn) with an annual production capacity
of 300,000 powertrains and 200,000
engines
New plant for the production of mini

South KRW700bn SUVs, with an annual production
Feb-19 Gwangju Hyundai 2021
Korea (USD630mn) capacity of 100,000 units, creating
1,000 new direct jobs
Date City/State/ Date

Country Company Value Brief Description
Announced Region Onstream
Addition of plug-in hybrid and

electric vehicles to the production
THB10bn line with an annual production
Feb-19 Thailand Chachoengsao Toyota 2022
(USD313.2mn) capacity of 7,000 PHEVs and 70,000
battery packs, with EVs to be added
from 2023
New plant for production of

electronic components, starting with
INR1bn sensor systems for accelerator
Feb-19 India Gujarat Hella na
(USD14mn) sensors and later expanding to
include other products, creating up
to 200 jobs
New plant operated by local

distributor Alhaj Automotive for
CNY201mn assembly of Proton passenger cars
Mar-19 Pakistan Karachi Proton 2020
(USD30mn) from kits imported from Malaysia,
starting with the Saga compact
sedan
New plant for production of long

glass fibre reinforced polypropylene,
used as a lightweight alternative to
Mar-19 China Guangdong Mitsui Chemicals na 2020
metal for components such as car
doors, with a production capacity of
3,500 tonnes a year
New plant through a joint venture

with Dongfeng Motor Parts to
produce aluminium wheels for
Mar-19 China Hubei Maxion Wheels na 2020
passenger cars, with a production
capacity of 2mn wheels a year,
creating 450 new jobs
na = not available; Source: Fitch Solutions
In Q119, we identified 13 new autos manufacturing projects announced or inaugurated in Asia, worth a combined total of
USD3.9bn (for those projects providing financial details). This is up slightly from 11 projects identified in Q118, although they were
worth a combined value of USD7.2bn, largely skewed by a USD5bn investment from Geely.
EV Production Spreading
In previous round-ups, investment into electric vehicles (EVs) or batteries has been dominated by China. However, in this
latest round-up, EV investment is more widely spread throughout the region with projects in China, India and Thailand. In China, the
industry is continuing its efforts to increase domestic EV battery supplies through a joint venture between Geely and CATL, bringing
together one of the country's largest carmakers and a domestic battery producer. The two will co-operate on the full supply chain
from battery cells to modules and to packs.
Thailand will also be home to battery production as Toyota Motor will add production of plug-in hybrids and pure EVs to its local
plant as well as produce 70,000 battery packs a year. This is a relatively small volume compared with dedicated battery plants but
will be enough to cushion the carmaker against any supply disruptions if it were to rely on a third-party supplier.
Finally, India is starting to see more EV production as the country moves towards its ambitious target of EVs accounting for 15% of
sales within five years. Hyundai Motor is already one of the top five brands in the country, which should be supportive in terms of
brand loyalty, especially as the top two brands - Maruti Suzuki and Tata Motors - are already producing cars in the country.
Still Room For Passenger Cars
A notable trend in this round-up is that there are still markets where there is room for growth in production of traditional passenger
cars. Slowdowns in demand for cars in many major markets have prompted manufacturers to move investment in those markets
towards SUVs, trucks or EVs, depending on what the new growth area of the market might be. However, investments in India by
Suzuki and Citroen and in Pakistan by Proton show that these are still target markets for passenger cars. The output for all three
comes online in 2020 and 2021 which also suggests companies expect demand for cars to be sustained in these countries. We
forecast passenger car sales in India to average growth of 7.6% in 2020 and 2021, and 5.3% in Pakistan, which supports their
interest in these markets.
Resurgence In South Korean Manufacturing
Another noteworthy development in this round-up is investment in South Korea, and more specifically in volume vehicle
manufacturing. Vehicle production in South Korea has declined every year since 2015 and as a mature autos market there has
been little cause for new investment as the major domestic carmakers also have a big overseas manufacturing presence to fulfil
demand in other markets. Now, however, Hyundai is investing over USD600mn in a new plant for mini SUVs. This is very much in
line with the global popularity of SUVs, and particularly at the smaller SUV and crossover end of the market.
There is also potential for another major investment in the country, although we have not included it until it is official. It has been
reported that parts supplier Myongshin has offered to buy the facilities of GM Korea to start contract manufacturing of EVs. If the
deal goes ahead, Myongshin, as part of a consortium, would invest KRW200bn (USD170mn) and begin production of 50,000 EVs a
year in 2021. This also aligns with another global trend, namely repurposing of facilities in otherwise saturated developed markets
for EVs and other new technology.
Indonesia Demographic Outlook

Demographic analysis is a key pillar of our macroeconomic and industry forecasting model. Not only is the total population of a
country a key variable in consumer demand, but an understanding of the demographic profile is essential to understanding issues
ranging from future population trends to productivity growth and government spending requirements.
The accompanying charts detail the population pyramid for 2017, the change in the structure of the population between 2017 and
2050 and the total population between 1990 and 2050. The tables show indicators from all of these charts, in addition to key
metrics such as population ratios, the urban/rural split and life expectancy.
Population
(1990-2050)
f = Fitch Solutions forecast. Source: World Bank, UN, Fitch Solutions
Indonesia Population Pyramid

2017 (LHS) & 2017 Versus 2050 (RHS)
Source: World Bank, UN, Fitch Solutions
POPULATION HEADLINE INDICATORS (INDONESIA 1990-2025)

Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, total, '000 181,436.8 211,540.4 226,712.7 242,524.1 258,162.1 272,223.0 284,751.0
Population, % y-o-y 1.40 1.39 1.33 1.19 1.00 0.84
Population, total, male, '000 91,116.0 105,868.3 113,821.0 122,278.3 130,039.0 136,921.1 142,938.4
Population, total, female, '000 90,320.8 105,672.1 112,891.7 120,245.8 128,123.1 135,301.9 141,812.7
Population ratio, male/female 1.01 1.00 1.01 1.02 1.01 1.01 1.01
na = not available; f = Fitch Solutions forecast. Source: World Bank, UN, Fitch Solutions
KEY POPULATION RATIOS (INDONESIA 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Active population, total, '000 108,465.7 136,664.8 147,729.5 160,508.9 173,088.0 184,697.0 193,818.5
Active population, % of total population 59.8 64.6 65.2 66.2 67.0 67.8 68.1
Dependent population, total, '000 72,971.1 74,875.6 78,983.3 82,015.3 85,074.2 87,526.0 90,932.5
Dependent ratio, % of total working age 67.3 54.8 53.5 51.1 49.2 47.4 46.9
Youth population, total, '000 66,104.3 64,913.8 68,126.2 70,253.6 71,920.6 71,831.9 71,189.5
Youth population, % of total working age 60.9 47.5 46.1 43.8 41.6 38.9 36.7
Pensionable population, '000 6,866.8 9,961.9 10,857.1 11,761.7 13,153.5 15,694.2 19,743.0
Pensionable population, % of total working age 6.3 7.3 7.3 7.3 7.6 8.5 10.2
URBAN/RURAL POPULATION & LIFE EXPECTANCY (INDONESIA 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Urban population, '000 55,490.6 88,851.2 104,145.0 121,077.7 138,741.5 155,771.4 171,764.7
Urban population, % of total 30.6 42.0 45.9 49.9 53.7 57.2 60.3
Rural population, '000 125,946.2 122,689.2 122,567.7 121,446.4 119,420.6 116,451.5 112,986.4
Rural population, % of total 69.4 58.0 54.1 50.1 46.3 42.8 39.7
Life expectancy at birth, male, years 61.9 64.6 65.2 66.1 67.0 67.7 68.3
Life expectancy at birth, female, years 64.7 68.0 69.2 70.3 71.2 72.1 73.0
Life expectancy at birth, average, years 63.3 66.3 67.2 68.2 69.0 69.8 70.6
POPULATION BY AGE GROUP (INDONESIA 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 0-4 yrs, total, '000 22,252.8 21,307.2 22,680.5 23,793.1 24,592.5 23,797.0 23,110.5
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 80-84 yrs, total, '000 588.1 812.0 965.4 1,149.5 1,113.8 1,393.4 1,547.8
Population, 85-89 yrs, total, '000 162.4 259.9 313.1 383.8 465.5 462.2 593.4
Population, 100+ yrs, total, '000 0.2 0.2 0.3 0.5 0.6 0.8 1.1
POPULATION BY AGE GROUP % (INDONESIA 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 0-4 yrs, % total 12.26 10.07 10.00 9.81 9.53 8.74 8.12
Population, 100+ yrs, % total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Autos Methodology
Industry Forecast Methodology
How We Generate Our Industry Forecasts
Our industry forecasts are generated using the best-practice techniques of time-series modelling and causal/econometric
modelling. The precise form of model we use varies from industry to industry, in each case being determined, as per standard
practice, by the prevailing features of the industry data being examined. We mainly use OLS estimators and in order to avoid relying
on subjective views and encourage the use of objective views, uses a ‘general-to-specific’ method. We mainly use a linear model, but
simple non-linear models, such as the log-linear model, are used when necessary. During periods of ‘industry shock’, for example a
deep industry recession, dummy variables are used to determine the level of impact.
Effective forecasting depends on appropriately selected regression models. We select the best model according to various different
criteria and tests, including, but not exclusive to:
• R2 tests explanatory power; Adjusted R2 takes degree of freedom into account

• Testing the directional movement and magnitude of co-efficients
• Hypothesis testing to ensure co-efficients are significant (normally t-test and/or P-value)
• All results are assessed to alleviate issues related to auto-correlation and multi-co-linearity.
We use the selected best model to perform forecasting.
It must be remembered that human intervention plays a necessary and desirable role in all of our industry forecasting. Experience,
expertise and knowledge of industry data and trends ensures that analysts spot structural breaks, anomalous data, turning points
and seasonal features where a purely mechanical forecasting process would not.
Within the autos industry, this intervention might include, but is not exclusive to, significant company expansion plans, new product
development that might influence pricing levels, dramatic changes in local production levels, product taxation, the regulatory
environment and specific areas of legislation, changes in lifestyles and general societal trends, the formation of bilateral and
multilateral trading agreements and negotiations, political factors including trade and the development of the industry in
neighbouring markets that are potential competitors for foreign direct investment.
Example of Vehicle Sales Model:
(Vehicle Sales)t = β0 + β1*(GDP)t + β2*(Population)t + β3*(Inflation)t + β4*(Lending Rate)t + β5* (Foreign Exchange Rate)t +
β6*(Government Expenditure)t + β7*(Vehicle Sales)t-1 + εt
Sources
Aside from government departments and official company reports, we rely on the International Organization of Motor Vehicle
Manufacturers (OICA), other established think tanks, institutes and international and national news agencies.
Autos Production Risk/Reward Index
Our Autos Production Risk/Reward Index (RRI) quantifies and ranks a country's attractiveness within the context of the automotive
industry, based on the balance between the Risks and Rewards of beginning or maintaining autos manufacturing operations in
different countries.
We combine industry-specific characteristics with broader economic, political and operational market characteristics. We weight
these inputs in terms of their importance to investor decision-making in a given industry. The result is a nuanced and accurate
reflection of the realities facing investors in terms of firstly the balance between opportunities and risk and secondly between
sector-specific and broader market traits. This enables users of the index to assess a market's attractiveness in a regional and global
context.
The index uses a combination of our proprietary forecasts and analyst assessment of the regulatory climate. As regulations evolve
and forecasts change, so the index scores change providing a highly dynamic and forward-looking result.
Benefits Of Using Fitch Solutions' Autos Production RRI
• Global Rankings: One global table, ranking all the countries in Fitch Solutions universe for autos production from least (closest to
zero) to most attractive (closest to 100).
• Accessibility: Easily accessible, top down view of the global, regional or sub-regional Risk/Reward profiles.
• Comparability: Identical methodology across 56 countries allows users to build lists of countries they wish to compare, beyond
the confines of a global or regional grouping.
• Scoring: Scores out of 100 with a wide distribution, provide nuanced investment comparisons. The higher the score, the more
favourable the country profile.
• Quantifiable: Quantifies the Rewards and Risks of doing business in the autos sector in different countries around the world and
helps identify specific flashpoints in the overall business environment.
• Comprehensive: Comprehensive set of indicators, assessing industry-specific risks and rewards alongside political, economic and
operating risks.
• Entry Point: A starting point to assess the outlook for the autos sector, from which users can dive into more granular forecasts
and analysis to gain a deeper understanding of the market.
• Balanced: Multi-indicator structure prevents outliers and extremes from distorting final scores and rankings.
• Methodology is a combination of proprietary Fitch Solutions forecasts, analyst insights and globally acceptable benchmark
indicators (for example, World Bank's Doing Business Scores and Transparency International's Corruption Perceptions Index).
Weightings Of Categories And Indicators

Autos Production Risk/Reward Index
Source: Fitch Solutions
The RRI matrix divides into two distinct categories:
Rewards
Evaluation of an industry's size and growth potential (Industry Rewards), and also macro industry and/or country characteristics
that directly impact the size of business opportunities in a specific sector (Country Rewards).
Risks
Evaluation of micro, industry-specific characteristics, crucial for an industry to develop to its potential (Industry Risks) and a
quantifiable assessment of the country's political, economic and operational profile (Country Risks).
Assessing our Weightings
Our matrix is deliberately overweight on Rewards (60% of the final RRI score for a market) and within that, the Industry Rewards
segment (60% of final Rewards score). This is to reflect the fact that when it comes to long-term investment potential, industry size
and growth potential carry the most weight in indicating opportunities, with other structural factors (demographic, labour statistics
and infrastructure quality) weighing in, but to a slightly lesser extent. In addition, our focus and expertise in emerging and frontier
markets has dictated this bias towards industry size and growth to ensure we are able to identify opportunities in countries where
regulatory frameworks are not as developed and industry sizes not as big as in developed markets, but where we know there is a
strong desire to invest.
INDICATORS - EXPLANATION AND SOURCES

Indicator Source Rationale
Rewards
Industry Rewards
Vehicle Production
Fitch Forecasted growth in production indicates growth opportunities and future speed of industry
Growth, % Chg y-o-y
Solutions development.
(five-year average)
Vehicle Production
Fitch
Volume, Units (five- Volume indicates size and development stage of local production industry
Solutions
year average)
Fitch
Competitive Solutions Indicates competition for productive resources and industry concentration using the number of
landscape Subjective vehicle brands being produced/assembled domestically.
Indicator
Country Rewards
Fitch
Size Of Labour Force The size of the working population indicates broad availability of labour.
Solutions
Fitch
Solutions
Average Wages/
Operational Indicator of the cost of labour, a major input in autos manufacturing.
Labour Costs
Risk
Indicator
Fitch
Cost and Availability Solutions Proxy for energy availability, a key input in establishing modern, mechanised and large scale
Of Utilities Operational production activities.
Risk Index
Fitch
Manufacturing A measure of complex goods as a percentage of total manufacturing, important to a value-added
Solutions
Capability industry such as autos manufacturing
Forecast
Risks
Industry Risks
Fitch
Evaluates the ability of producers to maintain production supply chains by assessing the quality and
Solutions
Logistics Risk extent of transport infrastructure, the availability and reliability of utilities networks, and the ease of
Operational
cross-border trading.
Risk Index
Fitch
Strength Of Industry Solutions
Identifies if local autos-related industrial policies are present and their respective strength.
Policy Subjective
Indicator
Country Risks
Fitch
The LT ERI takes into account the structural characteristics of economic growth, the labour market,
Long-Term Solutions
price stability, exchange rate stability and the sustainability of the balance of payments, as well as
Economic Risk Index Country
fiscal and external debt outlooks for the coming decade.
Risk Index
Fitch
The ST ERI seeks to define current vulnerabilities and assess real GDP growth, inflation,
Short-Term Solutions
unemployment, exchange rate fluctuation, balance of payments dynamics, as well as fiscal and
Economic Risk Index Country
external debt credentials over the coming two years.
Risk Index
Fitch
The LT PRI assesses a country's structural political characteristics based on our assumption that
Long-Term Political Solutions
liberal, democratic states with no sectarian tensions and broad-based income equality exhibit the
Risk Index Country
strongest characteristics in favour of political stability, over a multiyear timeframe.
Risk Index
Fitch
Short-Term Political Solutions The ST PRI assesses pertinent political risks to investment climate stability over a shorter time frame,
Risk Index Country up to 24 months forward.
Risk Index
Fitch
Operational Risk Solutions The Operational Risk Index focuses on existing conditions relating to four main risk areas: Labour
Index Operational Market, Trade and Investment, Logistics, and Crime and Security.
Risk Index
Autos Sales Risk/Reward Index
Our Autos Sales Risk/Reward Index (RRI) quantifies and ranks a country's attractiveness within the context of the automotive
industry, based on the balance between the Risks and Rewards of entering and operating vehicle retailing activities in different
countries.
We combine industry-specific characteristics with broader economic, political and operational market characteristics. We weight
these inputs in terms of their importance to investor decision-making in a given industry. The result is a nuanced and accurate
reflection of the realities facing investors in terms of firstly the balance between opportunities and risk and secondly between
sector-specific and broader market traits. This enables users of the index to assess a market's attractiveness in a regional and global
context.
The index uses a combination of our proprietary forecasts and analyst assessment of the regulatory climate. As regulations evolve
and forecasts change, so the index scores change providing a highly dynamic and forward-looking result.
The Autos Sales Risk/Reward Index universe comprises 124 countries.
Benefits Of Using Fitch Solutions' Autos RRI
• Global Rankings: One global table, ranking all the countries in Fitch Solutions' universe for autos sales from least (closest to zero)
to most attractive (closest to 100).
• Accessibility: Easily accessible, top down view of the global, regional or sub-regional Risk/Reward profiles.
• Comparability: Identical methodology across 124 countries for Autos sales allows users to build lists of countries they wish to
compare, beyond the confines of a global or regional grouping.
• Scoring: Scores out of 100 with a wide distribution, provide nuanced investment comparisons. The higher the score, the more
favourable the country profile.

• Quantifiable: Quantifies the Rewards and Risks of doing business in the autos sector in different countries around the world and
helps identify specific flashpoints in the overall business environment.
• Comprehensive: Comprehensive set of indicators, assessing industry-specific risks and rewards alongside political, economic and
operating risks.
• Entry Point: A starting point to assess the outlook for the autos sector, from which users can dive into more granular forecasts
and analysis to gain a deeper understanding of the market.
• Balanced: Multi-indicator structure prevents outliers and extremes from distorting final scores and rankings.
• Methodology is a combination of proprietary Fitch Solutions forecasts, analyst insights and globally acceptable benchmark
indicators (for example, World Bank's Doing Business Scores and Transparency International's Corruption Perceptions Index).
Weightings Of Categories And Indicators
The RRI matrix divides into two distinct categories:
Rewards
Evaluation of an industry's size and growth potential (Industry Rewards), and also macro industry and/or country characteristics
that directly impact the size of business opportunities in a specific sector (Country Rewards).
Risks
Evaluation of micro, industry-specific characteristics, crucial for an industry to develop to its potential (Industry Risks) and a
quantifiable assessment of the country's political, economic and operational profile (Country Risks).
Assessing Our Weightings
Our matrix is deliberately overweight on Rewards (60% of the final RRI score for a market) and within that, the Industry Rewards
segment (60% of final Rewards score). This is to reflect the fact that when it comes to long-term investment potential, industry size
and growth potential carry the most weight in indicating opportunities, with other structural factors (demographic, labour statistics
and infrastructure quality) weighing in, but to a slightly lesser extent. In addition, our focus and expertise in emerging and frontier
markets has dictated this bias towards industry size and growth to ensure we are able to identify opportunities in countries where
regulatory frameworks are not as developed and industry sizes not as big as in developed markets, but where we know there is a
strong desire to invest.
INDICATORS - EXPLANATION AND SOURCES

Rewards
Industry Rewards
Vehicle Sales Volume, Units Fitch Size of the overall vehicle market indicates potential for opportunities and scale of
(five-year average) Solutions operations.
Vehicle Ownership, Registered Fitch Ownership rates indicate market development/maturity and strength of consumer
Vehicles per 1,000 population Solutions needs/desires for vehicle ownership.
Vehicle Sales Growth, % chg y- Fitch

Forecasted growth in sales indicates growth opportunities for new/existing entrants.
o-y (five-year average) Solutions
Market Concentration, Fitch

Herfindahl-Hirschman Index Solutions Market concentration indicates the ease of entering and competing in the market.
Values Calculation
Country Rewards
Fitch
Driving Age Population Solutions The size of the population eligible to drive indicates underlying potential market size.
Forecast
Fitch
GDP Per Capita, USD Solutions GDP per capita identifies the purchasing power of consumers.
Forecast
Fitch
High and growing concentration of population in urban areas indicates greater pressure
Urban Population, % Of Total Solutions
for vehicle ownership and road-based public transport.
Forecast
Fitch
Spending Population, % Of Growth of spending population identifies the relative strength/influence of household
Solutions
Total decision makers who are ultimately responsible for vehicle purchase decisions.
Forecast
Fitch
Solutions Road quality highlights strength of road infrastructure and ability to cater for more
Quality Of Road Network
Operational developed vehicle fleets.
Risk Index
Risks
Industry Risks
Fitch
Regulatory environment for businesses is captured in the Operational Risk indicator for
Solutions
Regulatory Environment 'Economic Openness'. It assesses a country's openness to investment and trade,
Operational
especially by new market entrants.
Risk Index
Fitch
Measures the maturity of the new vehicle market and proxies for the rate of vehicle
New Sales, As % Of Fleet Solutions
replacement.
Forecast
Fitch
Measures the tax burden incurred by an imported new vehicle including MFN tariff rates,
Solutions
Vehicle Tax Rates excise and special taxes and VAT/GST. It is a strong determinant of how competitively
Subjective
priced a new market entrant would be.
Indicator
Country Risks
Fitch
The LT ERI takes into account the structural characteristics of economic growth, the
Long-Term Economic Risk Solutions
labour market, price stability, exchange rate stability and the sustainability of the balance
Index Country Risk
of payments, as well as fiscal and external debt outlooks for the coming decade.
Index
Fitch
The ST ERI seeks to define current vulnerabilities and assess real GDP growth, inflation,
Short-Term Economic Risk Solutions
unemployment, exchange rate fluctuation, balance of payments dynamics, as well as
Index Country Risk
fiscal and external debt credentials over the coming two years.
Index
Fitch The LT PRI assesses a country's structural political characteristics based on our
Solutions assumption that liberal, democratic states with no sectarian tensions and broad-based
Long-Term Political Risk Index
Country Risk income equality exhibit the strongest characteristics in favour of political stability, over a
Index multiyear timeframe.
Fitch
Solutions The ST PRI assesses pertinent political risks to investment climate stability over a shorter
Short-Term Political Risk Index
Country Risk time frame, up to 24 months forward.
Index
Fitch
Solutions The ORI focuses on existing conditions relating to four main risk areas: Labour Market,
Operational Risk Index
Operational Trade and Investment, Logistics, and Crime and Security
Risk Index
Fit
Fitch
ch Solutions, 30 North C
Colonnade
olonnade,, Canary W
Wharf
harf,, L
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ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
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Indonesia Autos Report Q3 2019

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Industry Risk/Reward Index ....................................................................................................................................................15

Indonesia Demographic Outlook............................................................................................................................................40

Passenger Car And Light Commercial Vehicle Sales

f = Fitch Solutions forecast. Source: Gaikindo, Fitch Solutions

AUTOS TOTAL MARKET - HISTORICAL DATA AND FORECASTS (INDONESIA 2018-2028)

Sales To Accelerate Further In 2019

f = Fitch Solutions forecast. Source: Gaikindo, Fitch Solutions

Strengthening Household Spending To Support Growth In Car Sales

Rising Incomes To Support Demand For Passenger Vehicles

f = Fitch Solutions forecast. Source: IMF, Fitch Solutions

Dovish Bank Indonesia To Spur Growth

Infrastructure Development To Underpin Demand For Commercial Vehicles

Commercial Vehicle Sales To Undergo Robust Growth

f = Fitch Solutions forecast. Source: Gaikindo, Fitch Solutions

Motorbike Sales To Remain On An Expansion Phase

Motorbikes To Remain Popular

f = Fitch Solutions forecast. Source: AISI, Fitch Solutions

Postive Outlook For Domestic Production

f = Fitch Solutions forecast. Source: Gaikindo, Fitch Solutions

Positive Outlook For Export Markets To Provide Further Tailwinds

PASSENGER CAR MARKET - HISTORICAL DATA AND FORECASTS (INDONESIA 2017-2028)

Latest Developments And Segment Drivers

COMMERCIAL VEHICLE MARKET - HISTORICAL DATA AND FORECASTS (INDONESIA 2017-2028)

Latest Developments And Segment Drivers

MOTORCYCLE MARKET - HISTORICAL DATA AND FORECASTS (INDONESIA 2018-2028)

Latest Developments And Segment Drivers

Industry Risk/Reward Index

Major Markets Still Dominate

Main Regional Features And Latest Updates

High Rewards, Low Risk Region Remains Crowded

Countries In Asia Congregate In High Reward Region

High Rewards, Low Risk Sweet Spot Places Asia First

Emerging Asia Markets Leading

Trade War Dragging On China's Performance

Trade War Weighing On China's Overall Attractiveness

ASIA AUTOS PRODUCTION RISK/REWARD INDEX

Thailand 79.8 76.8 78.6 72.8 55.7 64.2 72.8 1 2

Malaysia 66.7 77.2 70.9 77.2 67.4 72.3 71.5 2 3

China 72.6 68.3 70.9 70.1 67.4 68.8 70.0 3 4

India 92.9 57.1 78.6 63.8 42.9 53.3 68.5 4 5

Japan 65.2 67.0 65.9 60.3 78.9 69.6 67.4 5 7

South Korea 47.6 70.5 56.8 62.1 82.4 72.2 63.0 6 14

Taiwan 50.3 73.2 59.5 37.5 83.3 60.4 59.8 7 19

Indonesia 68.5 54.0 62.7 60.3 49.0 54.6 59.5 8 21

Philippines 61.0 51.8 57.3 46.9 40.9 43.9 52.0 9 28

Vietnam 55.4 60.7 57.5 22.3 48.4 35.3 48.6 10 32

Pakistan 72.0 29.5 55.0 47.8 7.7 27.8 44.1 11 37

Australia 6.5 53.6 25.4 41.1 79.8 60.4 39.4 12 41

Bangladesh 46.4 38.4 43.2 15.2 27.7 21.4 34.5 13 44

Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~

Regional Average 60.4 59.9 60.2 52.1 56.3 54.2 57.8 ~ ~

ASIA AUTOS PRODUCTION REWARDS

Thailand 62.5 83.9 92.9 79.8 78.6

Malaysia 46.4 57.1 96.4 66.7 70.9

China 17.9 100.0 100.0 72.6 70.9

India 89.3 94.6 94.6 92.9 78.6

Japan 30.4 96.4 68.8 65.2 65.9

South Korea 28.6 89.3 25.0 47.6 56.8

Taiwan 35.7 46.4 68.8 50.3 59.5

Indonesia 71.4 75.0 58.9 68.5 62.7

Philippines 82.1 32.1 68.8 61.0 57.3

Vietnam 48.2 39.3 78.6 55.4 57.5

Pakistan 91.1 50.0 75.0 72.0 55.0