Using Principal Component Analysis for Factor Analysis in Indonesian Automotive Industries

Abstract

Policies related to the automotive industry have become significant for the Ministry of Industry. The problem in determining these policies is the determination of important factors for the automotive industry so that the policies formulated are right on target. The search for these important factors can be done by using the factor analysis method. So far, no studies have been conducted to examine the factors that influence the growth of the automotive industry. In this study, factor analysis is performed on factors in the automotive industry using the principal component analysis algorithm. The algorithm seeks to describe independently the aspects that become the main factors in determining the automotive industry. Based on an analysis of factors in the automotive industry production, the most influential factors are foreign investment, vehicle ownership ratios, and at last the change in GDP.