There’s no doubt that the Covid-19 pandemic is having a profound impact on the world about us, and not just from a health perspective. There’s also what it is doing to economies, with the significant disruption brought about by the global outbreak affecting many sectors and businesses, some beyond salvation. The crippling effects will be cumulative, lasting well beyond the immediate term.

As you’d expect, the auto industry isn’t immune. Far from it, actually – after all, a new car purchase or a visit to the showroom isn’t quite at the top of the mind for folks right now (not that you could either, here, what with the movement control order (MCO) in place). With that, car companies are reporting a significant drop in sales in most markets, and an overall slump is set to follow in due course.

Indonesia is already projecting that it expects total car sales to plunge 50% this year as domestic and export demand shrinks due to the coronavirus pandemic, as Reuters reports. This was revealed by the country’s industry ministry, citing projections from Gaikindo, the country’s association for the automotive industry.

In 2019, a total of 1.03 million cars were sold in the country, while more than 843,000 units were exported in the form of CKD and CBU units, according to Gaikindo data, so the numbers could well dip under a million in total output this year as a result of the Covid-19 outbreak.

Domestic car sales in January and February fell 2.4% year-on-year to 159,997 units, while exports fell 21.5% to 103,765 units, highlighting an initial downtrend. In a statement, the industry ministry says it has put forward Gaikindo’s request for tax breaks to the finance ministry to help automakers weather the impact of the virus.

Gaikindo had told the industry ministry it was facing problems procuring components from countries under lockdown, while some of its members have stopped production lines to protect workers from catching the disease.

As indicated by the report, the auto sector is seen as a key indicator of the country’s economic health – domestic car sales are often used to gauge private consumption, and the sector contributes about 4% to the GDP, excluding oil and gas. “Disruption in the automotive industry will affect the national economy, as the industry has a significant contribution to GDP,” the industry ministry said.

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