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)