Tebet is a modest suburb of the Indonesian capital Jakarta, a district where a house costs about $100,000. On tiny lanes outside many of the red-tiled bungalows sit Mercedes-Benzes, BMWs and Jeeps — imported cars worth as much as the houses themselves.
In the city center and in its more exclusive districts, drivers show off sleek Italian sports cars, grand British-made Bentleys and top-of-the-line minivans.
The luxury vehicles are a sign of the growing wealth of the Indonesian middle class, the bulging wallets of its rich after years of a boom in mining and the stock market and the desire of both groups to convert the cash into the most prestigious set of wheels they can afford.
Sabam Rajagukguk, who works for a company that operates nightclubs and bars, used to drive a Toyota sport utility vehicle but recently traded up to a $190,000 Land Rover Discovery.
“It makes me feel like the king of the road,” he said. “People care how others see them. A Range Rover is the car for the ‘haves’ now, for a weekday car. For a weekend car, the sky is the limit. I see 20-year-olds arriving at clubs in Lamborghinis.”
In Jakarta, there is a six-month waiting list for Lamborghinis, Italian sports cars that carry price tags as high as $1.2 million in Indonesia. The brand has long been a status symbol in Indonesia, having been majority-owned by a son of the former dictator Suharto in the 1990s until he sold it in the 1998 Asian financial crisis.
Slightly below that segment of the market, Indonesian sales this year by the German premium carmaker BMW are up 45 percent, faster than its 25 percent growth in 2011.
Overall car sales in May rose 57 percent, the highest rate in eight months and more than twice the rate seen in China.
Also that month, sales doubled for cars with powerful engines of more than 3 liters, or 183 cubic inches, despite the near impossibility of hitting top speed on Jakarta’s gridlocked streets or on the bumpy roads outside town.
For some, one or two cars are nowhere near enough.
“This is for my family,” Zainudin, the 47-year-old owner of a coal company on the island of Borneo, said as he handed over $300,000 for a Rolls-Royce to add to a collection that already included Jeeps, a Land Rover and a Bentley. “I prioritize safety, comfort, a quality engine and better performance,” he added.
The record number of vehicles bought in 2011 prompted automakers including BMW and the U.S. giant General Motors to invest in manufacturing in Indonesia as part of a global move toward developing economies as centers for growth.
At the less prestigious end of the market, sales of motorcycles have started falling this year, suggesting that some riders may be swapping two wheels for four, helped by low interest rates for loans.
“The Indonesia market is growing, but also the range is widening,” Nissan’s chief operating officer, Toshiyuki Shiga, said during a visit to Jakarta in June to introduce a new, low-cost minivan.
Still, the real action is at the top end of the market. Western automakers are stepping up their sales efforts, and they are beginning to make inroads in a country traditionally dominated by Toyota.
Ford says it was the fastest-growing brand in Indonesia in 2011, while Chrysler, another U.S. carmaker, sold 75 percent as many vehicles in the first five months of this year as it had in all of 2011.
“All premium cars are already comfortable. I’m buying for prestige,” Parlin Sinaga, a 38-year-old Jakarta lawyer, said as he bought a canary-yellow Ford sports car to go with his BMW.
Long traffic jams of Japanese four-wheel-drive vehicles clog the entrances to Jakarta’s glossy malls, while inside, luxury automakers have started setting up showrooms to tempt shoppers to upgrade their vehicles.
“It’s a unique concept that we started first in Indonesia,” Ramesh Divyanathan, the head of BMW in Indonesia said of the shopping center showrooms. “Jakarta has become a mall city.”
“Due to the traffic situation, it is easier for customers and the public to see our products at the malls rather than visiting our dealers,” he said, adding that sales were being driven by people in their 20s and 30s, and aspirational “social climbers.”
BMW has a showroom featuring a sport utility vehicle, a sedan, a bicycle and toy cars to lure the groups of grandparents, parents and children that take family promenades along the aisles of Plaza Indonesia, the traditional shopping destination for the country’s elite.
Nearby, in the wealthy suburb of Menteng, tall gates at the bottoms of driveways often guard four or more cars, typically Toyotas and at least one Mercedes-Benz, whose Indonesian sales have grown five times as fast this year as in 2011.
Indonesia, with Southeast Asia’s biggest economy, where coal mining, palm oil plantations and retail businesses are the major growth industries, is producing millionaires faster than anywhere else, according to the wealth management firm Julius Baer.
In the Pacific Place mall across the road from the stock exchange, it is this new money that the Jaguar and Bentley showroom, complete with a wine bar and leatherbound books to accentuate the cars’ English heritage, is focusing on. The mall’s aisles are lined with Volkswagen’s Audis.
At a dealership named Glamour Auto Sport, stocked with $100,000 Jeeps and $150,000 Range Rovers, a salesman reveled in the status-driven spending spree.
“Customers already have other cars. They are buying them for the prestige,” he said. “The rich are buying them like candy.”
(International Herald Tribune)