Gaikindo expects higher car sales<\/p>\n
JAKARTA (JP): The association of Indonesian Automotive
\nIndustries (Gaikindo) revised its 2001 car sales forecast to
\n280,000 from 250,000 following higher-than-expected sales in
\nApril and May.<\/p>\n
Gaikindo chairman Bambang Trisulo said on Thursday that car
\nsales this year would now only be slightly lower than last year's
\n300,000 units.<\/p>\n
"We can expect a better sales figure this year," Bambang said
\nduring a media briefing to promote Gaikindo's July 21 to July 29
\nauto exhibition at the Jakarta Convention Center.<\/p>\n
Gaikindo initially forecast this year's car sales to fall to
\n250,000 units due to a plan to hike taxes, slower economic
\ngrowth, and domestic political uncertainty.<\/p>\n
He said that several members of the association had even
\npredicted that 2001 car sales would reach last year's level.<\/p>\n
"But I'm more conservative because their forecasts are based
\non the results of the last two months when people have been
\npurchasing cars based on expectations that prices would go up in
\nJune or July," he said.<\/p>\n
Bambang said that car sales in April and March reached 29,000
\nper month, higher than Gaikindo's forecast of 22,000.<\/p>\n
He explained that people rushed to buy cars during the period
\nin anticipation of coming higher prices as the government had
\nearlier announced plans to introduce higher value added tax
\n(VAT), luxury tax and import taxes.<\/p>\n
He said that car sales for the first half of this year totaled
\n148,000 units, a 13 percent growth compared to sales in the same
\nperiod last year.<\/p>\n
The government is determined to use tax as the main source of
\nrevenue to help contain the 2001 state budget deficit within a
\nsafer level of around 3.7 percent of gross domestic product
\n(GDP).<\/p>\n
But the government dropped the plan last month to raise VAT to
\n12.5 percent from the current 10 percent.<\/p>\n
The government has also yet to implement the plan to increase
\nimport taxes and luxury tax on car sales.<\/p>\n
But Minister of Trade and Industry Luhut Pandjaitan said
\nearlier that the government would proceed with the plan, aiming
\nto raise around Rp 330 billion (US$29 million) in additional tax
\nrevenue from the automotive industry.<\/p>\n
"Many bad things which had been predicted, did not
\nmaterialize. We even managed to beat our monthly sales target
\ninstead," said Bambang.<\/p>\n
Bambang said that car prices were expected to increase by an
\naverage of 20 percent to 30 percent this year if the government
\nproceeded with the tax increase plan.<\/p>\n
He said that the recent 30 percent increase in fuel prices and
\n20 percent in electricity rates contributed little to production
\ncosts in the automotive industry.<\/p>\n
He said that the biggest contributor to the price increase
\nwould be taxes and the weakening of the rupiah against the U.S.
\ndollar.<\/p>\n
The rupiah has been under pressure, hovering at Rp 11,555 per
\ndollar, due to a combination of domestic economic woes and
\npolitical instability.<\/p>\n
The domestic car industry is heavily dependent on imported raw
\nmaterials.<\/p>\n
"Car prices will be increased gradually, on average 5 percent
\nevery month, to maintain a relatively stable sales volume,"
\nBambang said.<\/p>\n
He said that with the increase in car prices, sales in the
\nsecond half would be slower than the first half.<\/p>\n
He added that the plan of the People's Consultative Assembly
\n(MPR), to hold a special session on August 1 aiming to impeach
\nPresident Abdurrahman Wahid would affect sales.<\/p>\n
There have been fears that if the MPR proceeded with its plan,
\nit could trigger conflict between the President's fanatic
\nsupporters and opponents.<\/p>\n
"We're not too sure what the situation will be in August and
\nafter August," Bambang said.(03)<\/p>",
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