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In-Depth Analysis Of The Covid-19 Impact On The Used Car Industry In Indonesia: Ken Research

The global outbreak of the Covid-19 virus has led to massive disruptions in all industries, especially sectors such as automotive, travel & more. The looming public health crisis has claimed over 2.36 million lives globally as of February 12, 2020, and continues to pose a threat to the lives, livelihoods, and businesses across the world. The emergency approval of some vaccines and the beginning of inoculation drives in various countries worldwide have come as a ray of hope amidst the trying times.

Indonesia is among the top 20 worst Covid-19 hit countries in the world. As of February 12, 2020, the total number of cases of novel coronavirus in the country reached 1.19 million, with the death toll clocking at 32.3 thousand. Indonesia’s economy, which majorly relies on tourism, apart from agriculture, was severely hit post the outbreak of the virus and travel restrictions imposed across the globe. In the second quarter of 2020, South East Asia’s largest economy contracted by 5.32% after large-scale social restrictions (PSBB) were imposed in various parts of the country.  The economy fell into recession, for the first time since the Asian financial crisis in 1998.

Impact on Auto Sector in Indonesia: The outbreak of Covid-19 caused a disruption in the supply chain and imports and hence, impacted the domestic assembly and production of vehicles. The total vehicle sales in the country nose-dived by over 44% and reached only 578 thousand units by the end of 2020, as compared to over 1 million units sold in 2019. Car sales significantly declined in the second quarter of the year amidst the social restrictions imposed. Post the lifting of movement restrictions and social distancing norms, car sales started picking up and registered a month-on-month growth of 30.4% in September 2020 and were the highest in October 2020, since April 2020.

Change in Consumer Behavior and Preferences: Many consumers deferred their car purchase decision amidst budgetary constraints with the onset of the pandemic. Many buyers preferred going through the used car inventory online or browse through listings, rather than visiting the showrooms. Used car platform, Carro, experienced a 600% increase in demand for certified used cars during the pandemic. The platform offered home test drives as well as the option of purchasing cars completely online. On the other hand, many financing companies also tightened the down payment requirement for used car loans from a minimum of 15-20% pre-covid to up to 30-35% during the pandemic, which consequently affected the used car sales in the country.

Impact on Used Car Sales and Future Outlook: Used car sales followed the trajectory of new car sales and are expected to have declined by over 40% during the whole year 2020. Online listing platforms such as OLX reported a 25-35% decline in the number of listings on the platform, post the pandemic outbreak. Used car inventory with dealers as well as prices also dwindled during the period. On average, the prices of pre-owned cars declined by 5-10%. The sales declined majorly during the second quarter of the year. However, towards the end of the year, sales started to recover, with some dealers reporting 80-90% of the normal sales level. Higher demand for used car financing or loans was observed during the year as the consumer incomes declined.

Steady recovery is expected in 2021 as consumers are likely to prefer private cars instead of public transport for mobility, as a spill-over of the Covid-19 pandemic. MPVs and Hatchbacks are anticipated to be demanded across the country. Used car sales between individuals are also expected to pick up as the traction of online platforms is increasing at a fast pace. Additionally, the online used car market is expected to witness growth due to the shift in the buying preferences of consumers. Dealerships are also expected to jump on the digital bandwagon by increasing their online presence either by partnering with existing auto platforms or by investing in their own dedicated used car sales websites and Instagram pages in order to boost reach as well as sales. This is expected to be coupled with increased value-added services such as longer warranty, after-sales services, and easily used car finance among other offers. Online auto-classified platforms are anticipated to invest in better technologies such as Artificial Intelligence and Virtual Reality to offer services such as online valuation by detecting the car condition via pictures, in a bid to enhance consumer browsing experience and increase their user base. Basis all these factors, Indonesia’s used car market is forecasted to grow at a CAGR of 15.7% on the basis of gross transaction value and 14.2% basis sales volume during the period 2020-2025.

Key Segments Covered: –

Indonesia Used Car Market (On the basis of GTV)

Indonesia Used Car Market (On the basis of Sales Volume)

Indonesia Used Car Market Segmentation (On the basis of Sales Volume)

By Market Structure (On the basis of Sales Volume & GTV)

Organized

Unorganized

By Type of Car

MPVs

Hatchbacks

SUVs

Others

By Brand

Toyota

Honda

Daihatsu

Suzuki

Others

By Vehicle Age

Less than 1 year

1-3 years

3-5 years

5-8 years

More than 8 years

By Mileage

Less than 20,000 Km

20,000-50,000 Km

50,000-80,000 Km

80,000-120,000 Km

More than 120,000 Km

By Regions

DKI Jakarta

East Java

West & Central Java

North Sumatera

Others

By Age Group of Buyers

18-30 Years

30-50 Years

More than 50 Years

Organized Used Car Market

By Sales Channel

Multi-brand Showrooms

OEM-Certified/Authorized Dealership Outlets

Unorganized Used Car Market

By Sales Channel

Customer to Customer (C2C)

Local Dealerships

Dealerships Covered

Mobil88

Toyota Trust (PT Astra Auto Trust)

Hyundai Auto Safe (PT Hyundai Mobil Indonesia)

Suzuki Auto Value (PT Suzuki Indomobil)

Diamond Smart Auto (PT Mitsubishi Motors Krama Yudha Sales Indonesia)

PT Tunas Ridean Tbk

Online Auto-Classifieds/Platforms Covered

OLX Indonesia

Mobil123

Carmudi

Oto.com

Carsome

Carro

Key Target Audience

Car Dealerships

Car Manufacturers

Car-Rental and Leasing Companies

Online Auto Classified Companies

Industry Associations

Regulatory Bodies

Used Car Auction Companies

Banks & NBFCs

Time Period Captured in the Report:-

Historical Period: 2014-2020

Forecast Period:  2021-2025

Key Topics Covered in the Report: –

Macroeconomic Overview and Overall Automotive Demand in Indonesia

Overview and Genesis of Indonesia Used Car Industry

Trends and Growth Drivers in the Industry and Challenges Faced

Indonesia Used Car Market Size and Segmentations, 2014 – 2020

Ecosystem and Value Chain of Used Car Industry

Customer Decision Making Parameters & Brand Perception Mapping

Cross Comparisons between Major Authorized Dealerships and Online Auto-Classifieds/Platforms and Company Profiles

Future Market Size and Segmentations, 2020-2025F

Covid-19 Impact on the Industry, the Way Forward & Upcoming Online Business Models

Analyst’s Recommendations

For More Information on the research report, refer to below link: –

Future of Indonesia Used Car Market

Related Reports by Ken Research: –

Indonesia Car Finance Market Outlook to 2024: Growing Prominence of Captive Finance Companies Backed by Surging Car Sales to Drive Market Growth

Saudi Arabia Used Car Market Outlook to 2025- By Market Structure (Organized & Unorganized), By Type of Car (Sedans & Hatchbacks, SUVs & Crossovers, Pick-ups and Luxury), By Brand (Toyota, Hyundai, GMC & Chevrolet, Ford and Others), By Type of Sourcing, By Age of Vehicle (Less than 1 year, 1-3 years, 3-5 years & More than 5 years), By Kilometers Driven (Less than 50,000 Km, 50,000-80,000 Km, 80,000-120,000 Km & More than 120,000 Km) and By Region (Northern, Southern, Central, Eastern and Western)

India Used Two-Wheeler Market Outlook to 2025- Driven by Increase in Workforce Migration and Aversion towards Using Public Transportation

Contact Us: –
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

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