Car sales to soar to 520,000: Gaikindo

Zakki P. Hakim, The Jakarta Post, Jakarta

The Association of Indonesian Automotive Manufacturers (Gaikindo) says the magnitude 9.0 earthquake and tsunami in Aceh and North Sumatra, which killed at least 105,000 people in the country, will not effect car sales this year.

Gaikindo expects that car sales this year will soar to about 520,000 units from last year's estimated 480,000 units, or about a 10 percent increase.

"The country's economy is expected to grow by 5 percent this year. And with a tolerable inflation and exchange rate, people will enjoy better purchasing power and affordable interest rates," Gaikindo chairman Bambang Trisulo said on Wednesday.

Multi Purpose Vehicles (MPVs) will dominate the market in 2005 as most Indonesians seek cars that offer plenty of foot room and luggage space.

Meanwhile, Bambang said, the generally more expensive Sports Utility Vehicles (SUVs) -- mostly "crossover SUVs" such as Ford Escape and Honda CRV -- have begun to attract more buyers.

"SUV sales will grow much faster than MPV sales," he said, adding that the number of SUVs on the streets had been limited by their price tag of at least Rp 200 million (US$21,550).

With Indonesia's income per capita at just over $1,000 a year, "affordable" MPVs such as Toyota Avanza and Daihatsu Xenia, the price of which is less than Rp 100 million, are at the top of consumer favorites list.

Gaikindo said the year 2004 was an important year for the country's car industry as sales were estimated to have reached a record high of around 480,000 units, marking the sector's full recovery from the devastating impact of the late 1990's economic crisis. The record was reached amid domestic security fears as Indonesia held its general election in April and two-phase presidential election in May and September.

Total car sales as of November hit 434,743 units, surpassing the 385,000 unit full-year target set by Gaikindo.

However, this good news for the industry was not so great for the Jakarta administration as studies showed that the average traveling speed in the capital is only 14.75 kilometers an hour. The sluggish pace of city traffic has also effected the economy, with traffic jam-related financial losses allegedly reaching Rp 41.05 billion a day.

Traffic conditions have also been exacerbated by the constantly increasing number of vehicles in the city, which currently stands at about 4.7 million -- some 1.3 million of which are private cars.

Indonesia recorded its highest car sales in 1997 with 386,691 units, right before the regional economic crisis struck. Sales in 1998 collapsed to 68,000 units before rebounding to about 300,000 in 2000 and steadily climbing since.