Car sales drop by 15 percent: Auto association

JAKARTA (JP): Car sales between January and November this year dropped 15 percent on the same period of 1995, the Association of Indonesian Automotive Companies said yesterday.

"However, the decline was not caused by the national car program," association chairman Herman Z. Latief said.

He said 292,925 cars had been sold by the end of last month, down 15 percent on the 348,205 cars sold in the same period last year.

"I don't think the drop has anything to do with the Timor (national car)," Herman said on the sidelines of a one-day seminar on Asia's automotive industry, held by the University of Indonesia's Institute for Economic and Social Research and the Kia Economic Research Institute.

Herman said high interest rates and tighter credit caused the drop.

He predicted 325,000 cars would be sold this year.

According to the association, car sales last year were dominated by Toyota which had a 25.5 percent market share, selling 96,699 cars; Mitsubishi had 19.5 percent, selling 73,705 cars; Suzuki had 18.5 percent, selling 70,140 cars; Daihatsu 15.8 percent, selling 59,743 cars; and Isuzu had 11.3 percent, selling 42,966 cars.

Mercedes had a 2 percent market share, selling 7,522 cars and Honda a 1.3 percent share, selling 4,870 cars. Other brands included Hino, Nissan, Ford and GM Opel.

Commercial cars, including mini-vans, made up more than 88.6 percent of sales.

PT Astra International, which represents Toyota, Isuzu, BMW, Daihatsu, Nissan Diesel and Peugeot, lead the market by capturing about 50 percent of sales.

Herman said the national car program, introduced last February, did not significantly affect the domestic automotive industry.

"The national car program... is only a tool to strengthen the structure of the automotive industry. It is meant to focus the market on industrialization by a single player," he said.

The government granted tax and tariff breaks for Timor cars, which are being developed jointly by PT Timor Putra Nasional -- a company controlled by President Soeharto's youngest son, Hutomo Mandala Putra -- and South Korea's Kia Motors Corp.

Earlier this year, the government let them manufacture the cars at Kia's plant in South Korea and import the cars ready for sale because Timor Putra had no assembly plant.

Timor Putra aims to sell 4,000 Timor sedans this year.

The national car policy has received harsh criticism from the United States, the European Union and Japan for allegedly breaching World Trade Organization rules.

Mahani Zainal Abidin, a professor at University of Malaya's Faculty of Economics and Administration, said yesterday Malaysia's national car program was not comparable to Indonesia's national car policy.

"The Proton (national car) introduced in 1983 was a government project, not a private sector program," she said.

Abidin said that when Malaysia started its national car program, the World Trade Organization and the General Agreement on Tariffs and Trade (GATT) had not been established.

"The Malaysian government put all its resources and efforts into the national car program. The vision was to create a single manufacturer which left out other car assemblers... All the program's policies were focused on creating a monopoly," she said.

While the Proton, and then the Kancil, sedans dominated 80 percent of the domestic market, Malaysia's national cars were facing new challenges, Abidin said.

"A national car should be internationally competitive and the protection it received would have to end with the implementation of GATT rules," she said.

She said Malaysia would have to find new partners to further develop national cars and accelerate technology transfer because it had become extremely dependent on its partner, Mitsubishi of Japan.

"The dependence on a single technical partner has made Proton and Kancil unable to operate most efficiently, making them lose their competitiveness," Abidin said. (pwn)