Faisal Maliki Baskoro – Indonesia looks set to overtake Thailand as home to the largest automotive industry in Southeast Asia on the back of its rising middle class, an automotive industry executive said on Friday.

Johnny Darmawan, president director of Toyota Astra Motor, told attendants at Indonesia's largest motor show that the automotive industry was doing well and could become the biggest market in Southeast Asia "soon."

"With a huge population of 240 million people coupled with a rising middle class with a per capita income exceeding $3,000, we believe Indonesia could be the biggest automotive industry and market in the region," he said.

Johnny said Indonesia's automotive industry recorded a strong performance over the past 18 months.

Hatta Rajasa, the coordinating minister for the economy, said Indonesia could overtake Thailand as the region's automotive hub. "We have to be optimistic that our automotive industry can be the biggest in the region, beating Thailand," he said.

Indonesia produced 650,000 cars last year and 384,000 cars in the first half of 2011, Johnny said, citing data from the Indonesia Car Industry Association (Gaikindo). It sold 764,000 cars last year.

"In the past five years, the automotive industry consistently outperformed economic growth. Last year it grew by 10.1 percent, contributing 6.98 percent of [gross domestic product]," Johnny said.

"In terms of taxes and other state revenues, the industry contributed Rp 80 trillion [$9.4 billion] last year. The contribution could be even bigger if we include related industries such as the component industry, leasing and the insurance industry."

In Southeast Asia, Indonesia is home to 31 percent of production, just behind Thailand's 32 percent. Globally, Indonesia's represents 1 percent of the industry.

Its surging middle class and low borrowing costs have boosted consumer spending on new cars and motorcycles. Typically, Indonesian consumers finance 80 percent of their car and motorcycle purchases with bank loans.

Bank Indonesia, which forecast the economy to grow by as much as 6.8 percent this year, has kept its key interest rate – the benchmark for lending – at 6.75 percent, providing room for automotive financiers to give a relatively affordable rate.

The 19th Indonesia International Motor Show, themed "Green Sustainable Technology," will run until July 31 at the at Jakarta International Expo at Kemayoran. Johnny said Gaikindo aimed to attract 300,000 visitors to the event.

The optimism of the Astra executive and government officials was given some justification by consumers at the event, such as Ardi Nur, a 30-year-old restaurant owner in Jakarta. Ardi said he was looking for a new multipurpose vehicle, and was prepared to spend Rp 500 million.

"I am making more money this year and I am planning to sell my old car and buy a new one," he said. "Even though cars are getting more expensive, I am making money and confident about my future."