Car exports surge as local makers look overseas

Car exports surge as local makers look overseas

JAKARTA (JP): Vehicle exports may jump to 15,000 cars this
year, from 8,000 cars in 1998, as most car makers opt for an
overseas market to avoid the domestic slump, a senior automotive
analyst has said.

Suhari Sargo said most car makers were focusing on foreign
markets as political uncertainty would likely continue to drag
down domestic sales.

"At least 4,000 cars were exported during the first three
months of this year alone."

Selling the cars overseas was the right strategy for local
automotive companies to survive the country's economic crisis, he
said.

Indonesian automotive companies produce cars in cooperation
with foreign partners to supply the local market. But they are
also allowed to sell their products overseas in limited amounts.

He said cars were sold to right-hand drive countries, such as
Papua New Guinea, Pakistan, India and Bangladesh.

Suhari said Indonesia's automotive sales may decline further
to between 40,000 cars and 50,000 cars this year, from 58,000
cars last year, as demand remains low.

He said the car market would remain depressed due to political
events in the country, such as the June general election.

Suhari said domestic sales remained sluggish in the first
three months of this year.

According to the Association of Indonesian Automotive
Industries, only 1,898 cars of all makes were sold in January.

"Sales figures picked up in February to 3,300 cars. The number
is predicted to reach the same level in March. But it will plunge
again approaching the campaign period and the general election."

He said the country's economic crisis together with political
instability were the main reasons for the expected further
decline in vehicle domestic sales during the next few months.

"Many people will suspend purchasing a vehicle, waiting until
the political events are over and until certainty in both
political and social conditions returns."

He said it would be difficult to predict when car sales would
return to pre-crisis levels when annual sales often surpassed
400,000 units.

Sales dropped to 58,000 units in 1998 as the economic crisis,
which began in the middle of 1997, became more severe and the
country's political situation became tenuous following the
downfall of former president Soeharto.

Suhari said most of the country's car manufacturers had
stopped producing or had downsized their production capacity due
to sluggish demand.

He added that 40 percent of the country's 300,000 workforce in
the industry had been made redundant as of this month.

Suhari said if a plant was idle, the company would not only
lose money but would also experience a technology setback.

He said many foreign car makers remained optimistic about the
long-term outlook for the country's automotive market, due to
Indonesia's vast territory and large population.

Several foreign car makers have intensified their involvement
in Indonesia. U.S-based General Motors has bought its local
partner Garmak Motor's stake so it could own 100 percent shares
in GM Indonesia, while Ford would acquire some part of
Indomobil's stake, he said.

Suhari urged the government to restructure the country's
automotive industry as soon as possible to save the ailing
industry.

"We already own infrastructures but we need investment. So we
have to create a conducive climate for car investment, which
includes business security and certainty and a healthy banking
sector." (gis)