Auto association expects robust sales this year

Auto association expects robust sales this year

JAKARTA (JP): The Association of Indonesian Automotive
Industries (Gaikindo), said this year's cars sales could reach
160,000 units, almost twice last year's figure, but warned that
continued social unrest could hamper the growth.

Gaikindo's chairman, Bambang Trisulo, said on Saturday that
signs of recovery in some business sectors would certainly mean a
higher demand for new cars.

"From an optimistic point of view, some even expect car sales
to reach 200,000," he told The Jakarta Post.

However, he said predictions of an improved car market stemmed
from the assumption that social unrest would not escalate to
rampant riots.

According to him, security issues had become the main concern
of the automotive industry.

"We are not worried that much about the economy, it's the
issue of security that worries us," he said.

Consumers, he said, would likely adopt a wait-and-see stance
as social riots kept unsettling Indonesia.

However, Bambang was confident that the process of economic
recovery would continue on the right track and further push up
the automotive demand.

Car sales plunged to 53,303 units in 1998 when the crisis hit
its peak, from 386,691 in 1997, but began to rise the following
year to 94,023, in line with the recovery in some business
sectors.

In 1998, car prices nearly tripled, whereas people's
purchasing power dropped by more than half as the rupiah
depreciated to almost 80 percent against the U.S dollar.

Because of the country's political situation in 1998,
particularly the general election in July, Gaikindo had predicted
car sales for 1999 would reach only 60,000. Nevertheless, the
automotive industry saw returning confidence that year, as total
car sales almost doubled.

Bambang said a stable rupiah rate and declining banking
interest rates would result in a higher demand.

"Banks are continuing to rechannel car loans," he added.

The loan facility had been reintroduced by banks and finance
companies early last year, after a total halt throughout 1998 due
to the then severe condition of the financial sector.

Even Standard Chartered Bank, a major foreign bank operating
in the country, launched a similar lending facility.

He expected that should the economy continue to improve,
Indonesia would regain its yearly car sales figures of the
precrisis level, which was between 200,000 to 300,000 units a
year.

"By the year 2003, we can expect sales to bounce back to their
precrisis level," Bambang said.

He said by then, Indonesia would enter the ASEAN Free Trade
Area (AFTA) for which the automotive industry must prepare itself
to face new opportunities and threats.

He cited Thailand and Malaysia as prospective markets, with
both having forecasted their respective car sales to range
between 300,000 and 400,000 for this year. (03)