checked EJK
Sedan market: Tough but workable
Rudijanto Contributor Jakarta
With their continuous surge in sales here, multipurpose vehicles (MPVs) are expected to grab a larger market share this year. Surprisingly the market for sedans has also started to look promising, as more Indonesians opt for features that optimize comfort for their in or out-of-town mobility.
The dominance of MPVs was reflected early this year when the sales of MPVs, mostly two-wheel-drive versions, reached 7,103 units, as compared to 1,901 sedans (below 1,500 cc) during the same period of last year. Sedans with higher cc -- up to 2,500 cc -- had a lower sales figure of 947 units.
In spite of the sales imbalance between the two types of vehicles, the Association of Indonesian Automotive Manufacturers (Gaikindo) predicted last year brighter prospects in the very near future for 1,500 cc sedans.
This prediction came true not long afterward. The positive sign for the sedan market was reflected in the January 2004 sales of small sedans, namely Honda City, Hyundai Accent, Suzuki Baleno and Toyota Vios/Soluna that totaled 1905 units -- more than double the 902 units sold in the same period of last year.
The sales of medium-sized sedans with 1800 cc engines also strengthened in February, with a significant increase led by Toyota Corolla Altis. From 213 in January, Altis' sales also more than doubled to 441 units in February.
Though other sedans in the 1800-cc class recorded lower sales figures in the same month, Altis' success is deemed to be a spark of hope for this segment. Meanwhile, according to Gaikindo's forecast, total car sales of all types for this year will reach 380,000 units. This means a steady growth over the past three years from 317,763 units sold in 2002. Last year saw total sales of 354,482 cars.
In the premium sedan market, a positive market signal was shown by a 15 percent increase in sales of BMW cars, from 129 in January 2004 to 148 in February 2004. Traditionally, the premium sedan market here has been relatively stable, with approximately 4,500-5,000 units sold per year.
Optimism is currently at an all-time high, especially after the peaceful general election this month. Car sales in March also showed encouraging signs as sales increased by 16 percent to 39,286 units, from 33,971 units in February.
Another prediction by Gaikindo is that 75 percent of the total market will be enjoyed by MPVs and small sedans this year. Hence, manufacturers and distributors of bigger sedans have to work harder to increase sales, or at least maintain the current healthy level.
General Motors Indonesia's director of sales and marketing Antonio Zara also thinks that the sedan market here may decline this year. However, the chances of smaller sedans, like the 1500 cc type, are better as they have so far outsold their larger counterparts.
"Before the economic crisis hit the country in 1997, naturally bigger sedans were preferred, but, today, out of four or five cars sold you will find that at least three or even more are 1500 cc sedans," said Zara.
The current record sales enjoyed by MPVs are surprising today, while yesterday's sedan manufacturers would never have dreamed of such success. Most car producers are of the opinion that the government's regulations are discriminating, especially in the application of higher luxury tax for sedans.
"In all fairness, we, manufacturers, suggest equal treatment in the application of luxury tax. We propose that we adhere to the concept of luxury tax itself, which means higher taxation for more luxurious items," said Zara.
He revealed that certain expensive cars, such as Honda CRV, are taxed less than the lower-priced Honda City simply because the latter is a sedan while the former is categorized as a Sports Utility Vehicle (SUV). According to Zara, the policy reflects an inconsistency with the true concept of luxury tax.
Gaikindo chairman Bambang Trisulo also expressed the associations's concerns over the implementation of luxury tax. He understood why several authorized importing agents (ATPMs) had requested the government to lower the luxury tax for sedans with less than 2000 cc. Indeed, Bisnis Indonesia quoted him as saying that this was probably why the growth of the sedan market here has lagged behind that of the MPV market.
If the luxury tax policy remains unchanged, players in the sedan market will have to wrack their brains to come up with an imaginative way to compete in this comparatively smaller segment. With sales figures of sedans constituting only a fraction of total car sales, manufacturers and distributors alike cannot do much but envy the success enjoyed by MPVs and even some SUVs.
To highlight his point, Zara said that GM is targeting an overall growth of between 30 percent and 50 percent this year, while keeping a less-than-15-percent estimate for growth in the company's sedan sales. Likewise, PT Hyundai Mobil Indonesia is targeting to sell between 12,000 and 13,000 cars this year, while the sales target for its New Accent sedan is merely about 15 percent of the total figure.
Albeit small in percentage, some sedan brands still attract those who prefer convenience and comfort in driving. While previously perceived as expensive cars, the current prices of certain small sedans are even lower than those of MPVs and SUVs. These affordable price tags have apparently boosted the sales of small sedans, mostly in the range of 1500 cc.
"Driving a sedan is certainly worlds apart from the experience of driving an MPV, because sedans have better suspension and they look elegant. These are some of the reasons why people still buy sedans," said Hyundai's Event and PR department head Lindarto Rahardjo.
Hyundai has various reasons to be proud of its 1500-cc New Accent sedan and its 1300-cc Getz. New Accent is the latest variant of Hyundai Verna. Aimed at young professionals and executives, it comes with a more aerodynamic, solid, compact and elegant look than its predecessor.
"We are able to sell 200 units of New Accent per month and between 200 and 250 units of Getz per month. That is good enough for a newcomer to this market like us," said Rahardjo.
While Korean carmakers are penetrating the market, long- established players, like Honda, cannot stay put to safeguard their market shares. Last month, Honda launched its New Civic 2004.
Coming with a more elegant, luxurious look -- as well as a sporty interior -- compared to its predecessor, the 1.7-liter- engine New Civic 2004 is expected to record similar success. Honda sold 9,967 sedans, including the Honda Civic last year.
The New Civic 2004 is available in five colors: Silverstone metallic, Satin silver metallic, Nighthawk black pearl, Satellite silver metallic and Heart red mica metallic. Honda Civic's sales grew by 16 percent in 2002 and further grew in 2003, by 19 percent.
GM is still relying on its Optra in the sedan segment. Powered by a 1800 cc engine that promises maximum efficiency and high speed, as well as a luxurious interior with the Total Noise Resistance (TNR) system, Optra is also targeted at professionals and executives.
Meanwhile, in the premium sedan segment, BMW has expanded its BMW 7 series by introducing the 730 Li in February. BMW also launched the face-lift of its popular X5 model in early march 2004.
Expecting the success of its 3 series, the company also introduced a new variant of 325i. Last year, BMW sold 2.149 units, taking a 45-percent share of the luxury car segment in
Another premium car producer, Daimler Chrysler, is also boosting the sales of the Mercedes Benz E-Class. Aside from the E-Class, other existing models on the market include the C and S classes.
With the various brands launched, both in the small and luxury sedan segments -- as well as the impressive efforts by manufacturers to lure customers -- it may be concluded that the future of sedans here is not so bleak after all.