Car market slump hits manufacturers
Car market slump hits manufacturers
JAKARTA (JP): A slump in the country's car market has forced
domestic automotive component producers to either halt their
operations or decrease production.
According to the Indonesian Automotive Parts and Components
Industries Association (GIAMM), 21 of its 125 members have closed
their factory doors.
Association chairman Achmad Safiun said on Thursday that the
lower demand for car components from local automotive assemblers
had also forced the association's other 104 members to cut
production up to 80 percent.
"Part of the car component industry has halted activities,
while companies still producing are generally only running at no
more than 20 percent of capacity, except for those exporting
their products," Safiun told a seminar on the automotive
industry.
He attributed the drop to the country's worsening economic
crisis.
Public purchasing power has been cut drastically, forcing a
sharp decline in the industry, he said.
Safiun said the crisis, triggered by the rupiah's fall against
the U.S. dollar, first hit original equipment manufacturers'
(OEM) sales due to a halt in component buying by local car
assemblers.
At the same time, component manufacturers saw a pileup of
newly arrived imported materials, he said.
Car parts makers were forced to reexport their materials since
the stocks could not be sold.
While OEM sales slowed down, spare parts sales also declined,
he said.
"Spare parts cannot be priced using the current exchange rate
because people's buying power is very weak," he said.
Most of the country's licensed automobile firms no longer
produce and assemble cars, due to an 85 percent drop in car sales
since last year.
OEM products contribute about 60 percent of the turnover for
GIAMM members, while spare parts sales make up the remaining 40
percent of the revenues.
Safiun said some of the component makers had begun shifting
their market to foreign countries in order to survive.
"The condition forced us to export because that's the only
solution to stay alive," he said.
As many as 60 GIAMM member companies are currently exporting
their products, while another 10 are expected to follow suit.
The remaining 34 members supply spare parts only to the local
market, he said.
Safiun said car component exporters often faced barriers and
restrictions from potential buyer countries, he said.
The United States and European countries, for example, require
automotive parts producers to have a QS 9000 qualification, he
said.
"GIAMM has lobbied car manufacturer General Motors (GM) in
Indonesia to allow its members to supply GM factories abroad," he
said.
The company has also reached an agreement with its Japanese
counterpart, the Japan Automotive Parts Industries Associations
(Japia), which agreed that its members would help their business
partners in Indonesia stay alive by helping them export their
products, he said. (das)