Major automotive players from Korea, operating in India and specializing in passenger cars, sought to explore trends in the automotive sector across the ASEAN region, with a specific focus on Indonesia and Thailand. With the global shift towards EV technology, it became apparent that not all regions were equally responsive to this evolution. Therefore, obtaining a comprehensive understanding of ASEAN market expectations was crucial for preparing informed, strategic scenarios.
The global automotive market has been well-established, with EV adoption taking off in the last decade. Western markets benefit from robust public transportation systems and advanced infrastructure. However, this has led to EV demand flattening or even declining in some areas.
ASEAN markets, on the other hand, present a different picture. Battery Electric Vehicles (BEVs) are seeing significant growth, particularly in Vietnam and Thailand, with Indonesia following behind. Despite this growth, several challenges persist.
For Indonesia, underdeveloped infrastructure remains a major hurdle. The country lags behind Thailand in EV technology, safety features, and other advancements. Often, automotive technology available in Japan appears in Indonesia 5-10 years later. Hybrids offer an alternative to meet environmental goals without relying entirely on EV charging infrastructure, making them an appealing option in long-distance travel. Additionally, growing disposable income has encouraged greater willingness to explore new technologies.Divergent Insights conducted in-depth interviews with industry experts and automotive journalists to generate actionable intelligence and identify key trends.
- Societal Validation: Driven by a “Fear of Missing Out” (FOMO), Indonesians are highly motivated to adopt new technologies as a way to enhance social status and self-actualization.
- Progressive BEV Market: Significant growth has been observed in Indonesia’s BEV sector since 2022, particularly among experienced buyers adding BEVs as second or third vehicles.
- Barriers for First-Time Buyers: For BEVs to appeal to first-time buyers and meet the government’s target of one million EVs by 2030, diverse models, competitive pricing, and improved infrastructure like charging stations and road readiness are critical.
Thailand
- ASEAN’s Benchmark: Thailand has positioned itself as the benchmark for four-wheelers in the region, offering competitive pricing compared to Indonesia.
- Readiness for BEVs: Thailand’s superior infrastructure, including better roads and household electricity capacity (6,000 watts per home), makes it more ready to accommodate EVs.
Cultural factors also differ. Indonesia, being an MPV-dominated market, favors seven-seater vehicles due to larger family sizes. Thailand, conversely, leans towards five-seater SUVs because of smaller household sizes.
Consumer Expectations (BEC, ICE, EV, Hybrid):
- Internal Combustion Engines (ICEs) remain dominant but are gradually being supplemented by hybrids and BEVs.
- Japanese OEMs are expected to prioritize hybrids, given their market dominance in ICEs. However, they might also venture into crossover SUVs or hatchback BEVs.
- Chinese OEMs are aggressively expanding in the BEV segment, including long-range plug-in hybrids.
- The EV market in ASEAN could stall without sufficient infrastructure or financial incentives, potentially boosting demand for plug-in hybrids in the short term.
- Indonesia’s PHEVs (Plug-in Hybrids) may outperform BEVs in the near term due to their affordability, longer range, and reduced charging infrastructure dependence. However, high taxes and costs for HEVs (Hybrid Electric Vehicles) remain a barrier in price-sensitive markets like Indonesia.
Actionable Targets for 2030:
- Market Share Projections: BEVs in Indonesia are expected to reach a 7-10% share by 2030, up from 3-3.5% currently. Thailand’s BEV market share could exceed 12%. Infrastructure development, price reductions, and government incentives are critical to achieving these goals.
- EV Infrastructure: Enhanced collaboration with PLN (Indonesia’s state-owned electricity company) to support home charging facilities is pivotal. Educational campaigns about home chargers and targeted infrastructure development in tourist destinations are essential.
- OEM Strategy:
- Technology Innovation: Interior design emphasizing larger screens and luxurious aesthetics should cater to ASEAN consumers’ preferences. Chinese OEMs are already leveraging this aspect to gain market share.
- Vehicle Design: Introducing smaller BEVs (hatchbacks and SUVs) to attract first-time buyers, while launching competitively priced vehicles in the IDR 200-400 million range, will be crucial.
- Government Advocacy: OEMs should push for subsidies, tax breaks, and regulatory incentives to accelerate adoption. Local manufacturing could also unlock cost savings and government benefits.
By fostering strategic partnerships, including joint ventures with battery manufacturers and technology companies, OEMs can elevate their offerings while optimizing efficiency and reaching a broader audience.
Divergent Insights’ data-driven approach enabled a detailed comparative analysis, spotlighting market dynamics and consumer behavior in Indonesia and Thailand. By providing actionable insights and strategic solutions, Divergent Insights empowered key automotive players to refine their ASEAN market strategies, paving the way for sustainable growth in an evolving industry.
