Indonesia’s auto finance to reach $53B by 2026 with online presence, EV finds Ken Research

Indonesia Auto Finance Market is in the growing stage, being driven by rising demand of automotives, positive outlook for e-vehicles, and increasing urbanization. There are several players in the Indonesia Auto Finance market some of which are Toyota astra finance, Daihatsu, Mitsubishi lease and finance, Suzuki Finance Indonesia, and Honda.

Increasing Digitization: multi-finance companies offer convenient facilities in terms of online presence. Automotive Financing Companies are increasingly moving towards higher technological advancements to improve operational profits as well as customer experience, which includes digital installment payment system, zero or very less face-to-face dealing, and simpler procedure, e.g. – Kredit Pintar. Car dealerships are expected to increasingly bring the experience of car shopping online by range of ways such as providing digital showrooms as well as e-finance. In the past, 5 – 10 years, Indonesia is witnessing a new wave of digital enhancements with several new fin-tech platforms for aggregation, peer – to – peer lending and more coming in the market. Some of the most well-known of these start- ups are- broom, cermati etc.

Revision of down payment rates: Financial authority of Indonesia (OJK) has allowed lower down payment rates for multi finance companies and banks whose NPF is less than 1%.

Low Interest Rates: Credit lending companies have lowered the interest rates to increase the loan taking capacity of customers; further supported by the Government’s efforts to increase financial support SMEs as SMEs contribute to major share of the total GDP of Indonesia. And also, the policies to take credit have been relaxed significantly to ease the process; strict regulations and verification of long-list of documents have been reduced.

Expanding urban population: Growing urban population and the increasing buying capacity as well as the awareness of the consumers has made automobile as well as auto finance industry to grow hand-in-hand.

Growth of E-vehicles: that Indonesian EV sector is still in its infancy but these also show that market interest has grown significantly. Electrum, a joint venture company between Indonesia decacorn Gojek and energy firm TBS Energi Utama (TBS), synergize to accelerate the development of the most complete and integrated electric vehicle ecosystem in Indonesia. Numerous policies have been issued by the government, to further boost the EV sector, such as Positive Investment List (PIL) as per which the companies that participate in development of EV sector are eligible to benefits like ease of attaining business licenses and leveraging various tax incentives.

Analysts at Ken Research in their latest publication “Indonesia Auto Finance Industry Outlook to 2026 – Driven by growing digital penetration, evolving vehicle ownership characteristics and rebates by the Government amidst systematically regulated vehicle ownership and financing policies by the regulatory authorities” by Ken Research observed that Indonesia Auto Finance Market is in the Growing Phase with Banking Institutions and NBFCs leading the Market and Online Aggregators Platforms entering the Market. Increasing Digitisation, Positive Outlook for E-Vehicles, Revision of Down payments, Expanding Population and Lower Interest Rates, are expected to contribute to the market growth over the forecast period. The Indonesia Auto Finance Market is expected to see high growth rate over the forecasted period 2021-2026F.