Car market battered by rupiah's free fall

JAKARTA (JP): The rupiah's free fall against the U.S. dollar has created new uncertainty among local car dealers, prompting some to impose unfixed prices and some to halt sales activities altogether.

Some car dealers said yesterday the roller-coaster ride of the currency had forced them to limit their stock as well as their sales, as the price of cars, especially those with high import content, followed the currency closely.

"We would rather sell what we have at the store right now, but if we have to order from a car's sole agent, the price would depend on the day of promised delivery," said Widiarto Tanuwibawa of PT Istana Kemakmuran Motor, an authorized Honda dealer.

"If a car's price increased by the time it was delivered, as it does when the dollar appreciates, the buyer would have to pay the inflated price," Widiarto told The Jakarta Post.

Since the stock of cars at his store was limited, most of the time he could not provide a customer's request for specifications such as color, he said.

A manager of an authorized Toyota dealership who requested anonymity said his dealership continued to sell despite the uncertainty. But he admitted the rupiah's sharp fluctuation had caused problems with potential buyers.

"Some people have canceled their purchases, although they have given a down payment, because the end price on the day of delivery exceeds their budget," he said.

Some dealerships simply halted sales because the sharp fluctuation caused problems for the local car agents to continue assembling and production.

Mercedes Benz is one of the companies which has stopped production at its local assembly line to give the market a chance to stabilize.

Albertus, an administrative manager of Mercedes authorized dealership PT Mercindo Perkasa, said his store and all Mercedes dealerships had suspended the sale of all products including sedans, trucks and jeeps.

"We have stopped selling since Dec. 22 and I don't know when we'll begin selling again," he said.

Prior to the suspension of activity, the sale of Mercedes commercial cars had dropped by 30 percent to 40 percent, he said, but the sale of passenger cars was not as bad.

Other brands have also begun to stop sales activities as the rupiah's continued fall made it hard for them to determine car prices.

The rupiah continued to disintegrate yesterday, with no sign of alleviation to the country's debt and confidence crisis.

The rupiah, which was only 2,400 to the dollar in early July, plunged through 15,000 yesterday, but managed to recover to 11,800 in the afternoon.

Stop selling

A saleswoman of PT Handal Mobilindo said her store had stopped selling BMWs since the dollar fell to Rp 11,000 last week.

"We still have cars in stock here, but we cannot determine their price if the rupiah still fluctuates wildly like this," Henny said.

The Toyota dealership's manager said his store could not meet the demand for some cars, because some automakers were no longer producing cars.

"For example, the demand for Land Cruisers has actually been pretty good, but we cannot provide the product," he said.

The same thing had happened with other products, such as automatic or diesel-fueled Toyota Kijangs, he said.

All the car dealers agreed the currency crisis had largely cut their sales.

Widiarto said the sale of Hondas had dropped by between 40 percent and 50 percent since December, partly due to increasing prices. The price of the Honda Cielo Accord sedan, for example, had jumped to Rp 131 million (US$10,916) from Rp 107 million in December, he said.

Henny said sales at her store, including of the Daihatsu Feroza, Suzuki Escudo and Isuzu Panther, dropped by about 50 percent. She said an Isuzu Panther was selling for Rp 66 million yesterday, a drastic leap from Rp 59.2 million the day before.

The sale of Toyotas, including the widely popular Kijang, dropped by an average of 60 percent to 70 percent.

"I think all dealers are suffering, but we cannot stop selling because that is how we make our living," one dealer said.

Meanwhile, PT Timor Distributor Nasional announced yesterday a 30.77 percent increase in the price of its Timor sedan following the government's move to abolish all tax privileges given to the so-called national car producer.

The company said that the prices were increased partly due to the severe monetary crisis, not just because of the scrapping of the tax exemptions.

The new price of its SOHC model (off the road) in a solid color is Rp 44.25 million (US$3,700) and in a metallic color Rp 44.75 million.

The DOHC model (off the road) in a solid color is now Rp 51 million and Rp 51.5 million for a metallic colored vehicle. (das/gis)