Automotive - Bank Indonesia extends 0% down payment policy for vehicle loans

Automotive - Bank Indonesia extends 0% down payment policy for vehicle loans In an effort to stimulate consumer spending, Bank Indonesia (BI) has once again extended the incentive policy that allows for zero-down-payment motor vehicle loans. This policy, which was initially set to expire at the end of 2024, has now been extended to December 31, 2025. BI Governor Perry Warjiyo announced this decision on Wednesday, October 17th, highlighting the positive trend in motor vehicle loans compared to other consumer loans. Vehicle loan growth in August 2024 reached 8.3% yoy, surpassing the 8.1% growth recorded in the previous month. In contrast, home ownership credit, another significant contributor to consumption credit, experienced a slowdown during the same period, growing by only 11.4% yoy in Aug24, compared to 14.3% yoy in the previous month. (Source : Kontan) Comment : The extension of the 0% down payment policy is a positive development that is expected to significantly boost overall automotive loan demand in 2025. Combined with other factors such as extended credit tenors, unit discounts, and lower auto loan yields due to reduced benchmark interest rates, we anticipate that total car and motorcycle sales in 2025 will experience substantial growth compared to 2024. Based on these favorable conditions, we maintain our Overweight stance on the automotive sector.