FOR AUTOMOTIVE -- WEDNESDAY<\/p>\n
;JP;
\nANPAd..r..
\nCar-market-outlook<\/p>\n
Car market hits slippery patch as buyers apply brakes<\/p>\n
Rudijanto
\nContributor\/Jakarta<\/p>\n
The increase in interest rates and growing uncertainty over
\nthe stability of the rupiah will likely slow down the boom in the
\ncountry's automotive market.<\/p>\n
Several major car distributors in Jakarta have actually seen a
\ndrastic decline in the demand for new cars during the last two
\nmonths.<\/p>\n
\"Before the rise in interest rates and the fuel price hikes, I
\ncould sell between six and eight cars per month but after the
\nincrease in interest rates, it is hard to sell even one car per
\nmonth,\" said Hasan Maksum, a young and energetic sales executive
\nat PT Astra International Tbk. (Astra).<\/p>\n
Working at one of Toyota Sales Operation's branches in
\nJakarta, Hasan recalled that persuading prospective buyers --
\neven those who did not have an urgent need for a new car -- was
\neasy before the rise in interest rates. \"With the increase in
\ninterest rates, convincing prospective buyers has become quite
\ndifficult,\" he added.<\/p>\n
The move by Bank Indonesia to raise its short-term promissory
\nnote (SBI) benchmark rate in order to halt the fall in the value
\nof the rupiah against the U.S. dollar has resulted in a surge in
\nlending rates, including those for car loans.<\/p>\n
Relying mostly on sales bonuses, Hasan has good cause to worry
\nabout his earnings.<\/p>\n
Hasan's anxiety also reflects the uncertainty among the top
\nexecutives of the country's automotive industry. None of them
\nexpected that the country's car market would experience such
\nturbulence.<\/p>\n
The enthusiasm shown by the public at the country's largest
\nautomotive exhibition, held by the Indonesian Association of
\nAutomotive Firms (Gaikindo) in Jakarta in July, indicated that
\nbusiness was set to remain on the right track.<\/p>\n
This year's nationwide car sales figures as of August still
\nshowed encouraging sales of 395,774 units, or a 30.5 percent
\nincrease compared to the same period of last year. Together with
\nthe number of imported cars sold from January to August, the
\ntotal sales figure stood at 450,000.<\/p>\n
When the rupiah started to stumble in the second week of
\nAugust on dollar demand to finance oil imports and concerns over
\nthe impact of high oil prices on government fuel subsidies,
\nindustry players started to get worried.<\/p>\n
Gaikindo's chairman, Bambang Trisulo, was quick to predict
\nthat the automotive market would be ruined if the value of the
\nU.S. dollar rose above Rp 10,000. He said that the most affected
\nfirms would be those that had high import components, with the
\nbuilt-up car trade being the worst affected.<\/p>\n
Now, the US dollar is still well above Rp 10,000 after
\nreaching an alarming level of Rp 11,000 per US dollar at the end
\nof August. To control the downward slide of the rupiah, Bank
\nIndonesia has increased the SBI interest rate to 10 percent, This
\nhas in turn forced the banks increase the interest on car loans.<\/p>\n
This situation is not good for car sales as. According to
\nresearch company ACNielsen, between 80 percent and 90 percent of
\nnew car purchases worldwide, including in Indonesia, are financed
\nby loans provided by banks or finance firms.<\/p>\n
With the increase in interest rates, car prices and fuel
\nprices, more and more car prospective buyers will tend to
\npostpone or even cancel their purchases.<\/p>\n
Muhammad Mashir, the president director of PT Trust Finance, a
\nfinance firm, admitted that the demand for car loans had slowed
\ndown. He was quoted by a local newspaper as saying that some
\nwould-be buyers had even canceled their planned purchases.<\/p>\n
Aside from being discouraged by the increase in interest
\nrates, prospective buyers had also been deterred by the increases
\nin the amount of the down payments required, which now often
\nstood at more than 20 percent.<\/p>\n
\"Prior to the hike in the SBI rate, we only asked for down
\npayments amounting to 10 percent of the car's price. But now we
\nare requiring prospective buyers to make down payments of a
\nminimum of between 15 percent and 20 percent of the car price,\"
\nsaid a source in a Jakarta-based finance company, who requested
\nanonymity.<\/p>\n
While the procedures for applying for a car loan from
\nhis company are the same, he said that the increase in the down
\npayment was necessary to ensure the seriousness of a prospective
\nbuyer.<\/p>\n
\"Of course, we have to be more careful before disbursing
\nloans. I think the increase in the down payment will discourage
\nthose who are not serious from applying for loans. This will
\nhopefully avoid us incurring bad debts,\" he added.<\/p>\n
Currently, the interest rate on car loans charged by banks and
\nfinance companies ranges from 10 percent for a one-year loan to
\n12 percent for a four-year loan.<\/p>\n
Car prices have also increased. For instance, the price of a
\nlow-end G type Toyota Avanza van, which was sold at Rp 100
\nmillion earlier this year, now costs Rp 110.82 million (about
\nUS$10,550). The price of the G manual version of the Innova has
\nalso increased by around Rp 6.02 million from its previous price
\nof Rp 172.5 million.<\/p>\n
The gloomy outlook for the car market will likely force
\nGaikindo to revise downward its earlier automotive sales target
\nof 550,000 units for 2005.<\/p>\n
According to Bambang of Gaikindo, if the rupiah continues its
\ndepreciation against the U.S. dollar, Gaikindo will not be able
\nto meet its target of 550,000 sales by the end of this year.<\/p>\n
Amelia Chandra, the head of the Domestic Marketing Division of
\nPT Astra Daihatsu Motor, was quoted by Kompas as saying that the
\nmarket was getting tougher. Though it was still good, she said it
\nwas not as strong as before the dramatic increases in
\ninternational oil prices.<\/p>\n
She said that the demand for cars up to the end of the year
\ncould decline by between 20 percent and 30 percent. This
\nprediction was based on the decline in the number of car orders
\n(SPKs) submitted to the manufacturers.<\/p>\n
With banks and finance companies starting to exercise more
\ncaution in approving car loans, the number of SPKs was expected
\nto decline in the coming months.<\/p>\n
The feast enjoyed by car manufacturers, banks and finance
\ncompanies seems to be coming to an abrupt end or, at the very
\nleast, for the next couple of months as most consumers continue
\nto be hit by rising fuel and commodity prices.<\/p>\n
Without a drastic improvement in the macroeconomic situation
\nin the next year, the fasting season for the automotive industry
\nmay last longer than expected.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/for-automotive-wednesday-1447899208",
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