Hyundai Motor to Expand Presence in Indonesian Market Dominated by Japanese Carmakers

Hyundai Motor’s Indonesian plant has broken through the milestone of production of 100,000 units in one year, a first for the plant. This gives a green light to Hyundai’s plan to increase its share in the local and ASEAN markets by using the plant as a bridgehead.

The cumulative production volume of Hyundai Motor Manufacturing Indonesia (HHMI) reached 106,925 units as of the end of April. The plant began full-scale operation in January 2022. In March, the plant crossed 100,000 units only one year and two months since the beginning of its operation, according to the Indonesian Automotive Industry Association or Gabungan Agen Tunggal Industri Kendaraan Bermotor Indonesia (GAIKINDO) on May 14. Until now, Japanese automakers have enjoyed a monopoly in Indonesia, with a market share of around 95 percent.

Hyundai’s Indonesia plant produces four models — the Creta, MPV Stargazer, midsize sport utility vehicle (SUV) Santa Fe, and electric car IONIQ 5. Of these, the Creta and Stargazer are not only sold in Indonesia but exported to the greater ASEAN region. In fact, Hyundai Motor Indonesia exported 14,399 vehicles in the first four months of this year. This is the fifth largest volume among foreign automakers doing business in Indonesia.

Hyundai’s sales in Indonesia stood at 12,672 units on a wholesale basis in the first four months of this year, which represented a 59.5 percent year-on-year surge. Its market share has also grew by 1.4 percentage points, from 2.3 percent last year to 3.7 percent this year. In terms of local sales, the company was ranked 13th in 2021, but has now jumped to the seventh spot. There is still a gap with Japanese companies such as Toyota (107,795 units), Daihatsu (65,119 units), and Honda (51,882 units), but as local production continues to rise, expectations are growing that it will be able to break the monopoly of Japanese cars.

Hyundai is also actively expanding production. The Korean carmaker recently decided to ramp up production its IONIQ 5 to 1,000 units per month at its plant in Indonesia. In April, sales of the IONIQ 5 surged more than threefold to more than 600 units from the previous month. “Hyundai is employing a strategy to bring a change to the Indonesian car market by preempting the Indonesian electric vehicle market as Hyundai is ahead of Japanese automakers in the electric vehicle market, although Japanese automakers are leading Hyundai in cars with internal combustion engines,” an industry insider said.