Car sales not expected to reach target
Car sales not expected to reach target
JAKARTA (JP): The Association of Indonesian Automotive
Industries estimates that auto sales will only reach about
380,000 this year, or about 12 percent below the initial target
of 420,000 cars, due to the fall in demand in the last three
months.
The association's chairman, Herman Z. Latief, said yesterday
that the currency crisis and the government's credit crunch
policy to shore up the rupiah had caused a sharp drop in car
sales.
"I believe that auto sales this year will not reach the target
of 420,000 cars, but only 380,000 cars," Herman said.
He admitted that car sales had fallen sharply the last two
months due to the tight monetary policy imposed by the government
since early August.
The tight monetary policy, which had caused a sharp increase
in interest rates, made car loans expensive, he said.
Car sales dropped by 20 percent to 34,000 in September, from
43,000 in August, due to the expensive loans, he said.
"I estimate that sales will fall further to below 30,000 cars
in October and to below 20,000 in November," he said, adding that
car sales were below the monthly average of 40,000 between
January and August.
Even though car sales had fallen sharply this year, Herman
said it might become worse next year when the full impact of the
financial crisis began to hit the industry.
"I predict that next year's sales will only be about 50
percent (of sales this year)," he said.
He said auto sales in the first three quarters of this year
only reached 318,000 cars.
Last year, sales reached 330,000 during the same period.
He said the association's initial sales target was 500,000
cars per year before 2000, and one million in 2010.
"But I think we'll need a few more years to reach the target,"
he said.
He said motorcycle companies also faced declining sales, but
it was not as low as car sales.
He said the association had previously set a sales target of
at least two million motorcycles this year, but during the
monetary crisis, sales were only estimated to reach about 1.3
million.
Herman, also president of the Kramayudha Tiga Berlian Group --
a large automaker -- said the credit crunch, the bleak outlook of
most businesses and the steep increase in prices of imported
goods were driving the car industry toward bankruptcy.
He said automakers had to raise prices due to the price
increase of imported spare parts, which boosted production costs
by at least 30 percent.
"We'll have to increase our prices by 5 percent next month. We
have to do that otherwise we'll go bankrupt," he said.
He said recovery in the national automotive industry was
expected with the recovery of the economy, but growth in the
sector would be slow.
"I don't believe that after a recovery, the automotive market
will grow as fast as it has in the past decade. But if we can
recover in two or three years, it will be very good," he said.
He said the fall in sales might force automakers to cut
salaries of their workers or even lay off some.
"But a layoff is our last choice, we will find other ways to
solve the problems, such as efficiency in other sectors," he
said.
He estimated that at least 300,000 people work in the car
industry.
He hoped that financial assistance now being prepared by the
International Monetary Fund (IMF) would be able to solve the
country's monetary problem and could gradually revitalize overall
economic activities, including in the automotive sector.
Separately, the chairman of the Indonesian Automotive
Components Association, A. Safiun, said the increase in spare-
part prices had increased by 54 percent due to the sharp
depreciation of the rupiah.
He said the impact of the currency turmoil was strong due to
the industry's heavy dependence on imported materials and
components and on credit sales.
Herman said production costs at automotive companies would
increase by 30 percent, but added that automakers would not hike
prices that much.
He said car prices, which last month rose by an average of 3
percent, would further increase by 5 percent next month. (08)