Carmakers face stiff competition in every class

Carmakers face stiff competition in every class

Burhanuddin Abe, Contributor, Jakarta

Competition between car makers is accelerating as seen at the
Gaikindo Auto Expo 2005, which was held in Senayan, Jakarta from
July 8 to July 17.

Automobiles in various categories, including sedans, compact
sedans, SUVs (Sport Utility Vehicles) and MPV (Multi-Purpose
Vehicles) were on display at the expo.

At least 140 companies took part in the expo, with 28 of them
being trademark holder sole agents (ATPMs).

As the most prestigious automobile expo in the country,
Gaikindo's expo was like looking at the national automotive
industry landscape in miniature.
The population's ambition to own new cars is so great that the
government's statement that it would enforce a progressive tax
rate on automobiles and limit the sale of cars in the fuel
efficiency drive paled in insignificance as automobile
transactions at the expo surged to Rp 1 trillion in just nine
days.

Indeed, car sales have continued to increase following the
higher economic growth rate. While in the post-monetary-crisis
year of 1999, just over 100,000 cars were sold, the year 2000
showed an increase to 308,805 cars. The figure is expected to
continue to rise in the next three years: 317,791 cars in 2002,
354,409 cars in 2003 and 483,169 cars in 2004.

The Indonesian Association of Automotive Manufacturers
(Gaikindo) chairman Bambang Trisulo predicted that if the
country's political and security situations remained conducive to
business, sales of new automobiles in late 2005 could reach
480,000 to 500,000 units.

The increase will also be contributed to by the launch of mini
automobiles, which are sold for between Rp 100 million and Rp 150
million per unit. "Mini automobiles have greatly stimulated the
national automotive market and have significantly jacked up
market growth this year. The market shows a great demand for
these cars. That's why all manufacturers like Toyota, Suzuki and
Mitsubishi, have brought out cars in this category," he said.

This optimism is quite natural, especially given the fact that
automotive producers like Suzuki, Toyota, Mitsubishi and
Daihatsu, in their positions as the principals of ATPMs, have
now controlled the majority shares of these agents. This practice
has raised production volume. Bigger investment will be made to
meet market demand while automobile designs will cater to the
taste prevailing in the domestic and global markets. Another
important factor is that the selling prices will also be made
more competitive.

Fortuner, an SUV Urban, may be singled out as an example of a
successfully marketed automobile with a unique design and a
maximum capacity sold at a very competitive price. This car,
which is a variant of IMV 4, a product of Innovative
International Multi-Purpose Vehicle (IMV), a Toyota global
project, is now officially marketed in Indonesia. The presence of
this car will push the SUV market in this country to break the
upper sales threshold of 35,000 units in 2005.

"Our target is to sell about 500 Fortuner automobiles a month
this year," said PT Toyota-Astra Motor's (ATM) president director
Johnny Darmawan.

There is indeed a strong reason for Johnny's optimism.
Fortuner represents today's trend of an urban SUV design concept.
This automobile, whose very low coefficient of resistance enables
it to be more aerodynamic in appearance, is sold at an on the
road price of between Rp 295 million ( 2.7 V G A/T 4x2 type) and
Rp 353 million (2.7V A/T 4x4 type).

The launch of Fortuner on July 8 here was a surprise because
the mid SUV market has been dominated by Nissan X-trail and Honda
CRV these years. Nissan X-Trail is provided with a 2.5 liter
(2,488 cc), 4-collinear-cylinder, double overhead camshaft
(DOHC), 16-valve (four valves per cylinder) engine as well as a
continuous variable valve timing control (CVTC). Honda CRV,
meanwhile, has a 2.4-liter, 4-collinear-cylinder, DOHC 16-valve
engine, completed with an intellectual variable valve timing and
a lift electronic control (i-VTEC)

Thanks to this CVTC and i-VTEC technologies, the engine will
be stronger in power while still being fuel-efficient and
environmentally friendly.

Throughout 2004, 6,071 CRV cars and 7,131 Nissan X-Trail
automobiles were sold. This year the battle is not yet over and
the outcome will not be known until late 2005 or early 2006.
However, the market landscape has now changed with the presence
of Fortuner. The SUV market also sees the presence of Ford
Escape, Mazda Tribute, Suzuki Escudo 2.0, Suzuki Grand Escudo
2.7, KIA Sportage II, Hyundai Santa Fe and Subaru Forester.

The presence of these new SUVs shows market dynamism,
especially because in the past two to three years, SUV has gained
greater popularity, said Soehari Sargo, a national automotive
observer.

He also noted that these SUV automobiles were introduced to
the market not only in pursuit of sales but also in the context
of brand image promotion. Competition is very stiff and "this is
the response of market dynamism," he added.

In the premium class, you can find the darlings of automobile
fans, such as Rolls-Royce, Bentley, Porsche and Jaguar. The most
bitter competition is now going on between Mercedes-Benz and BMW.
While Mercedes relies on its latest models (New A-Class, C Sport,
CL 350 and New SLK Class 350), BMW shows of BWM Series 3 and
730Li as well as 740Li.

The attraction that these BMW of series 7 have is that their
V8 engines are completed with Bi-Vanos and Vaveltronic. These
electronic-operated automobiles use a streptonic transmission
system with six levels of acceleration.

A no less exciting competition is also occurring in the sub-
compact, hatchback automobile market. Popular makes in this class
include, among others, Honda Jazz iDSI, Honda Jazz VTEC,
Chevrolet Aveo, Hyundai Gets, Peugeot 206, Renault Clio and,
lately, Suzuki Swift. This last mentioned automobile, which was
launched at the Gaikindo expo, is available on the Indonesian
market in a CBU condition. At a glance, this Japanese-made
automobile, which made its debut appearance in the Paris Motor
Show in 2004, resembles BMW's new Mini Cooper. Not surprisingly,
Suzuki Swift has immediately stolen the attention of car
enthusiasts.

Provided with a 1.5-liter, 4-collinear-cylinder, 16-valve (4
valves a cylinder) DOHC, variable valve timing (VVT) engine,
Suzuki Swift directly faces Honda Jazz with its VTEC (Variable
Valve Timing and Lift Electronic Control). The VVT technology
makes the engine more powerful and more efficient in fuel
consumption while its combustion residue will be more
environmentally friendly.