SINGAPORE, April 10 (Reuters): Indonesia is set to overtake Thailand as Southeast Asia's biggest car market as early as this year, driven by an expanding middle class and growing demand for budget, environmentally friendly vehicles, company executives and analysts said.
Auto sales in Indonesia, Southeast Asia's largest economy, grew 17.8 percent in March from a year earlier, led by Toyota Motor Corp, Daihatsu Motor Co Ltd and Mitsubishi Motors Corp, data from industry association Gaikindo showed on Thursday.
This increase is more than double the revised 8.3 percent year-on-year growth in February, the same month that Thai auto sales fell 45 percent year-on-year, the most recent data from the Federation of Thai Industries shows.
Indonesia is set to benefit from companies looking to diversify their operations away from Thailand, where political uncertainty and floods have hit domestic demand and worsened its economic outlook.
"Our partners look at two big countries-Thailand and Indonesia. It's probably because of the population," Prijono Sugiarto, chief executive of Indonesia's biggest auto distributor PT Astra International, told Reuters in a recent interview.
"Nowadays Indonesia is getting more popular. We are seen as one of the most potential countries in Southeast Asia," Sugiarto said.
Domestic consumption accounted for more than half of Indonesia's economy, which the central bank expects to grow at between 5.5 and 5.9 percent this year, one of the fastest paces in Southeast Asia. Indonesia is the world's fourth-most populous nation, with some 240 million people.
Indonesia's ambitions to be a regional manufacturing hub, however, could be hampered by its ageing, insufficient infrastructure and a power supply made unstable by decades of under-investment and bureaucracy.
