A walk through Indonesian International Motor Show

Yesterday we visited the opening of Indonesian International Motor Show 2013. We couldn’t see all of the car as some were still being concealed from public, but we sensed that the competition is heightening, especially in the low to mid segment market where automakers aggressively competiting to tap the growing middle income population that currently is dominated by Toyota-Daihatsu especially in the in the LCGC and low MPV segment.

In the other hand, Renault just announced its comeback into Indonesian market which indicates rising interest from European carmakers that will pose more threat to the current market leader in the longer term.

Tough start in LCGC segment. On this year IIMS, Nissan, Honda, and Suzuki formally introduced their LCGC, completing the commitment of the five first companies that intended to enter the market. We think Toyota-Daihatsu will lead the segment, though they will face tough competition due to the pricing and specification that are quite competitive between one and the other.

•Toyota Agya (1.0 litre) came in with the price range of IDR100mn-IDR121mn while Daihatsu Ayla (1.0 litre) set its price range at IDR76mn-IDR107mn. We think the twin will lead LCGC market backed by Toyota-Daihatsu strong brand equity, after sales service, and first mover advantage, Furthermore, Ayla and Agya are offered with automatic transmission features (begin at IDR116m for Agya and IDR100m for Ayla).

•Nissan is displaying its 1.2 litre Datsun LCGC brand series: Datsun GO and GO+ that just being launched in the last two days with the price indication of below IDR100mn. We feel upbeat on Datsun GO+ as the only LCGC with seven seats. However Nissan may lose momentum seeing that the sales will only start between early to mid of the next year.

•Honda is also introducing its 1.2 litre LCGC city car, New Brio Satya with price ranging from IDR106m-IDR117m. New Brio Satya is practically the manual transmission version of New Brio (priced at IDR131m-IDr136m).

•Suzuki is launching its LCGC, the Karimun Wagon R (1.0 litre). The price range will be revealed in the next one or two month when the car is being marketed.

More players are coming into low MPV segment. The most notable new entrants will be Honda with its Honda Mobilio, MPV version of Brio, with 1.5litre engine. Mazda also join the segment with its VX-1 (1.4litre engine; IDR163m-IDR191m). Earlier in this year, following Ertiga success, Suzuki introduced the automatic version. Chevrolet also came with its long delayed Spin. While we think corporate buyer will stay with Avanza-Xenia, part of individual buyer may sway into this new alternatives.

LCGC benefit local tyre makers. We saw that most of the LCGC car use either GJTL or MASA tyre. While it will increase domestic demand going forwards, we expect the rising domestic demand from domestic OEM market to offset weak export market.