Auto body says car sales to fall 75 percent

JAKARTA (JP): The country's car industry will likely remain dormant the rest of the year, with annual domestic car sales expected to slump by 75 percent to about 100,000, the Association of Indonesian Automotive Industries (Gaikindo) predicts.

The association's chairman, Herman Z. Latief, said yesterday that corroded purchasing power resulting from the economic crisis would continue to keep domestic car markets at a level drastically below last year's of about 395,000 cars.

He said car companies would be in worse shape, but they would take any drastic measure to survive the crisis, until the economy began its recovery process.

"All companies have already cut their production," he told reporters at an informal luncheon yesterday.

For example, many companies now only produce 10 days a month, keeping their workforce idle the remaining days of the month.

Many companies have not extend the contracts of their workers, he said. Contract workers made up 20 percent to 30 percent of the workforce in the car industry, he added.

Car analyst Suhari Sargo said car companies would have to "take a long sleep" during the crisis, which was expected to last at least three years, before they could operate normally again.

"This is probably the only thing they can do to prevent going under," he said.

Herman said domestic car sales last month were down to about 4,000 cars from 6,431 in February. The amount is only 10 percent of the sales in the same month last year.

Of all the car categories, commercial car sales suffered the most, as there was practically no sales of commercial cars in March, he said.

Normally, the sales of commercial cars made up about 88 percent of the market, while sedans made up about 12 percent, he said.

But this year, he estimated sales of sedans would reach about 20,000, down from 75,000 last year, he said.

Herman said he expected car sales would pick up in the next three quarters, an improvement on first quarter sales.

"Traditionally, sales are better after the first quarter," he said.

But the industry would have to wait until the country showed that the economic recovery process was returning the market to normal.

"We will still have to wait and see the market reaction to the last economic reforms agreed upon recently," he said, referring to the amendment of the reform package signed by the government last week in exchange for financial aid from the International Monetary Fund.

"Naturally, the car market is inseparable from the macroeconomic activity," Herman said. (das)