A car price war?

A car price war?

Who says the prices of cars in Indonesia will never go down?
The jolts that have taken place in the past six months are proof
that car prices can indeed come tumbling down. The decline was
triggered by the launching of the PT Timor Putra Nasional's car.
Priced at Rp 36 million, the Timor car is far cheaper than others
in its class.

The jolt was amplified when Bimantara launched the Cakra and
Neggala sedans, which sell for Rp 45 million and Rp 64 million,
respectively. These price reductions were immediately followed by
the dealers of other makes which have been on the market for a
long time.

But are these price cuts based on the market phenomenon of
supply and demand? This is an appropriate question because maybe
the other car dealers have reached a silent agreement among
themselves to cut prices to beleaguer the Timor, which is able to
sell at low prices because of the tax concessions which it has
received.

If this is what is happening, for how long can the dealers go
on and be content with meager profits?

In order to hold out they make take steps to improve
efficiency, possibly through lay-offs and reduced orders from
supporting industries. This could affect our employment
situation.

We hope that the current phenomenon is based on pure market
dynamics. If this is true we could enjoy two advantages
simultaneously: cheap cars and a robust national automotive
industry.

-- Republika, Jakarta