Car prices skyrocket as rupiah tumbles

By John Aglionby

THE RUPIAH's rapid disappearance into the realms of Monopoly money is putting the skids under practically every industry in Indonesia, and the automotive sector is no different.

The Tysonesque blows car manufacturers and dealers are taking on a daily basis have been well documented over the past 10 days -- slowing production, or even halting in Mercedes' case, cash flow problems and staff being suspended on full pay -- but what does it mean for people wanting to buy a car?

It depends on your circumstances is the short answer. If you have bundles of dollars stashed under your mattress you will be laughing.

Prices have risen, are rising and undoubtedly will rise again in the near future but these increases are not at all keeping pace with the rate at which the rupiah is depreciating.

Take, for example, Bimantara's cars, the Cakra and the Nenggala. Today they cost Rp 45.95 million and Rp 56 million respectively on the road (US$5,750 and $7,000 at an exchange rate of Rp 8,000).

On Thursday, they will increase to Rp 47.7 million and Rp 58.8 million respectively, increases of 3.8 percent and 5 percent.

These are hefty hikes, but in the first three days of last week the rupiah fell from 5,850 to the dollar to 7,900, a depreciation of 35 percent, and has gone even lower since then.

Jongkie Sugiarto, the president director of PT Bimantara Cakra Nusa, is well aware of these statistics. "Our cars' local content is about 20.6 percent. That means we are importing, and paying for in dollars, almost 80 percent of the cars. But we are selling them in rupiah.

"The result is that they are cheaper than they would be in America and we are selling them at a loss. So we are very reluctant to sell. We are not pushing our sales staff at all."

Bimantara is lucky in that it does not have massive debts and so, is not facing a cash flow crisis. Other companies are in not such an enviable position. Astra, for example, is feeling the pinch and is keen to shift stock.

This became very apparent with a call to an Astra dealer inquiring about buying a Toyota Starlet. Its current on-the-road price is Rp 64.3 million. But the sales assistant I spoke to said: "However, we are offering discounts of three-and-a-half million rupiah. So, even though we raised the prices on Monday, we will be able to let you have it for less."

If you are a dollar buyer and looking for a top-of-the-range bargain there are several options. Mercedes is still selling at December prices, which is an instant attraction. But its quoted prices -- Rp 173 million for a C230 Elegance automatic or Rp 361.8 million for an E320 V6 Elegance automatic -- were never cheap in the first place and are off the road.

By the time you actually drive them out of the showroom you will have coughed up another 20 percent to 30 percent on top of this.

"We know they are not cheap but when you are in this range of cars it is more of an emotional issue rather than a price one whether to buy a Mercedes," said Lela Pello, the head of public relations for PT German Motors Manufacturing, Mercedes sole agent here.

"And not only are people still buying Mercedes, they are paying for them in cash, which amazes us."

The German giant's main competitors, Volvo and BMW, have both raised their prices. Since Tuesday, a BMW 528 cost Rp 277 million and the 323 automatic Rp 186.5 million. Volvo, which put its prices up at the end of last month, is selling its S70 SE for Rp 171 million, the V70 T5 for Rp 225 million and its S90 Executive E for Rp 300 million.

For most people, though, these will remain pipe dreams, however much the rupiah falls. At the other end of the market, the cheapest sedan is still the Timor car. Its cheapest model, the SOHC, is Rp 37.3 million, while the DOHC will set you back Rp 41.5 million.

A Timor spokesman said: "We cannot predict anything about when our prices might go up again and by how much. The only thing I can say for certain is that the Timor car is still by far the cheapest sedan available in Indonesia."

If you would rather be seen dead than in a Timor car but cannot afford the Rp 58.5 million for a Suzuki Baleno, which is the next cheapest, then the best option would be to go for a people carrier, such as the Kijang or the Panther.

The new Toyota Kijang ranges in price from Rp 37.25 million, to Rp 64.7 million for a top-of-the-range Kristal. Isuzu Panthers, which went up in price on Wednesday, are much of a muchness, ranging from Rp 37 million, to Rp 59.2 million for the Panther Hi-Grade.

For the minority of people for whom money comes above image, style and status, the cheapest of the cheap options are still the small minibuses.

A Daihatsu MB van is retailing at Rp 26.1 million and the Suzuki Carry is a tad pricier at Rp 26.5.

Even these vehicles are unlikely to get much cheaper in the next few months so anyone dithering over buying would be advised to buy now, a number of industry executives said.

"The only factor that might drive prices down is if companies need cash quickly. Otherwise prices will continue going up and up as everyone struggles to survive," Jongkie said.