Fitch: Recovery in Indonesia Auto Industry Remains Fragile

Fitch Ratings says in a new report that the Indonesian auto sector will remain under pressure in 2016. The agency forecasts car and motorcycle sales volume will only post modest growth of about 3%, after declining by 18%-20% yoy in 9M15.

Weak purchasing power and soft consumer confidence should continue to dampen demand for the overall auto segment. At the same time, further delays in the execution of government spending; rupiah depreciation; and continued uncertainty over the global economy may prolong the decline in consumer confidence and hinder the recovery in auto demand.

Inventory management particularly on the dealership level is key, as it will discourage severe competition and price discounting and also help manage dealerships' cash flows