Astra has no plans to hike car prices despite weak rupiah

JAKARTA (JP): Giant publicly listed auto-manufacturer PT Astra International said on Monday that so far it had no plans to adjust car prices despite the persistent drop in the rupiah against the U.S. dollar.

Astra corporate secretary Aminuddin said the rupiah was too unstable to justify a price increase at this moment.

"Actually, it looks as though the rupiah is strengthening ... we don't want to rush and raise prices yet," he told The Jakarta Post.

Last year, Astra's net revenue jumped by 91 percent to Rp 28.4 trillion, but the rupiah's sharp fall erased earnings, and ended with the company Rp 239 billion in the red.

Analysts said Astra had been too slow in raising car prices to offset its soaring import costs because of dollar gains.

Aminuddin, however, argued that raising car prices was not an easy decision.

Any decision to increase car prices would depend on inputs from the management of Astra's various car brands, he added.

The company's car brands, like Toyota, Honda and BMW, dominated the market with a 50 percent share last year.

The management of Astra's different car brands, he said, had their own pricing considerations.

"I haven't heard them (management) discussing price hikes yet," he said.

Aminuddin declined to say at what dollar exchange rate the company had pegged the prices of its cars.

As for now, he added, the company's car division would maintain the current rupiah trading band for its cars.

Although upbeat on continued strong sales, he said the company would not risk losing buyers due to higher car prices.

The local car market is already tight, with industry observers predicting car sales to end lower or equal at most, when compared with last year.

The Association of Indonesian Automotive Industries, (Gaikindo) warned that security concerns could push car sales this year down by 15 percent to around 250,000 units from more than 300,000 units last year.

It said if the rupiah remained weak, car producers might have to raise prices, putting more pressure on already fragile demand.

Contrary to Gaikindo's bleak outlook, Astra recorded higher sales figures for the first two months of this year, compared with the same period last year.

For March, however, its local sales dropped slightly to 9,227 units from 10,728 for the same month a year earlier. Aminuddin blamed the drop on a recent strike by one of the company's contractors.

"Because of the strike, output fell by 1,500 units; obviously it affected sales for that month," he explained.

He further dismissed worries that a weaker rupiah was hindering the company's debt repayment schedule.

Aminuddin said the next installment of the company's debt repayment did not fall due until December 2002.

By then, Astra would have to pay 25 percent of its $695 million and Rp 819.25 billion II series bonds.

Payment of these bonds is spread over 25 percent annual installments until the year 2005.

As for this year, he said, the company had concluded in March payment of its I series bonds ahead of the original schedule in June.

What remained were the interest payments on Astra's II and III series bonds totaling $50 million this year, he said.

"We're not worried about meeting the interest payments. We'll use the funds from our operational cash flow," Aminuddin said. (bkm)