Astra strives to boost vehicle market share amid rough times
Astra strives to boost vehicle market share amid rough times
Starting as a trading company in 1957, PT Astra International
has become one of the country's conglomerates with a business
network extending from automotive assembling and distribution, to
financial services, heavy equipment, agribusiness, information
technology and infrastructure. Astra's chief executive officer
Budi Setiadharma shared his views with The Jakarta Post's Rendi
A. Witular in a recent interview on the company's business
strategy and projection this year and next year. The following
are excerpts from the interview:
Question: How are Astra's vehicle sales this year?
Answer: We expect domestic car sales to reach around 340,000-
350,000 units this year, with Astra accounting for 42-43 percent
of the sales. In terms of market share, we are declining but not
in terms of units.
The increase in total sales is beyond our expectation. Last
year, we estimated the sales for this year to reach only 330,000
units. However, the increase is still below the pre-crisis level
in 1997 of around 400,000 units.
As for motorcycles, we estimate total domestic sales at 2.8
million units throughout the year with Astra expected to grab
more than 52 percent of the sales.
What caused Astra's market share to decline?
You know that early this year the government decided to raise
the price of diesel oil above gasoline's. The plan has
unfavorably impacted on sales of our diesel-fueled Isuzu van,
which is long known to be fuel-efficient. Although the plan was
later annulled, Isuzu van sales have yet to recover.
However, the decline has been balanced by the higher-than-
expected sales of Toyota cars, which until the end of this year
was estimated to reach around 95,000 units. Our initial sales
target for Toyota this year is around 80,000-83,000 units.
What's the impact on your total sales revenue?
Our sales revenue growth will not be high this year. We
estimate there will be an increase of Rp 1 trillion (US$117
million) to Rp 2 trillion from last year's sales. (Last year
Astra booked total sales of Rp 30.68 trillion).
Is the plan by Astra's principals to launch new multi-purpose
vehicles (Toyota Avanza and Daihatsu Xenia) in line with the
strategy to lift back your market share?
Of course, we hope the new MPVs (multi-purpose vehicles) will
help increase our market share. We are also hoping that our
customer service product, Astra World, can also help increase the
market share.
We expect to launch the MPVs in early next year, hopefully in
January. The price range is around Rp 100 million with two engine
capacity options of 1,000 cc or 1,300 cc. The MPVs will basically
have seven sits with standard and deluxe versions.
Don't you think that the MPVs will hit the sales of Toyota Kijang
and Daihatsu Taruna?
To some extent, it will do. But for customers who need a wider
MPV, they can still turn to Kijang.
The launching of the MPVs are not intended to counter our
competitors, as the plan was prepared around two to three years
ago. At that time, we realized that Indonesian customers, due to
the economic crisis, needed an inexpensive MPV.
What's your sales projections for 2004?
Sales in 2004 will much depend on the progress of the general
elections. We estimate that domestic car sales will be at least
the same as 2003, a little bit above 350,000. In that kind of
environment, customers will prefer taking a wait-and-see stance.
People will be filled with a negative mood which prompts them to
hold up demand.
How's about your debt-buyback program this year? Still on track?
We have targeted to trim down our debt to below US$500 million
(from around $800 million at the end of 2002) this year, and it
is on track. Until the end of this year, our debt to equity ratio
is expected to reach 0.4 percent, meaning that our balance sheet
will be stronger.
We hope that by accelerating the payment of our debt, we can
receive a release date from our creditors by December, in order
to pay out dividends of up to 50 percent of our 2003 net profit.
If the release date is not issued within the month, we are only
allowed to pay an interim dividend of around 20 percent.
Astra recently sold its controlling stakes in auto-making joint
venture PT Toyota Astra Motor (TAM) to Toyota Motor Corp (TMC).
Will there be any impact on Astra's revenue?
Of course there will an impact to our revenue composition, but
for sure we have not yet finished the calculation. We hope to
complete the calculation in another month.
Rumors say TMC is planning to take control of its car
distribution. What is your comment?
I don't think TMC will do that. At least for the next five
years, our control of the distribution (through the Auto 2000
outlet) is still guaranteed based on our agreement with TMC. The
agreement will be renewed every five years, but TMC has no plan
at all to take the distribution control so far, unless Astra
fails to perform in its distribution business.
Astra plans to divest several business sectors managed by its
subsidiaries. Can you explain more?
We only plan to divest our non-core businesses in PT Astra
Agro Lestari such as cacao, rubber and tea operations. Astra Agro
will fully concentrate on crude palm oil production.