Sat, 27 Jul 1996

Cheap sedans threaten van market

JAKARTA (JP): The current entrance of new cheap cars into the local market is likely to change the structure of auto sales, with sedans taking over the market presently dominated by multi- purpose vehicles.

Chairman of the Indonesian Automotive Industry Association Herman Z. Latif called on the existing auto firms to quickly adapt to such changes.

"There will very possibly be no growth (in sales), only changes of market segmentation ... Therefore, every auto firm has to reorient its business," Herman told journalists yesterday.

He noted that during the first semester of this year, domestic auto sales dropped by 14.4 percent to 160,000 units as compared to the same period last year.

Competition in the domestic auto market has been heightening following the introduction of the government's national car policy last February, which grants tax and tariff breaks to PT Timor Putra Nasional, a company controlled by President Soeharto's youngest son, Hutomo Mandala Putra.

Collaborating with Kia Motors Corporation of South Korea, Timor Putra launched its Timor car -- deemed as the national car -- earlier this month. The Timor sedan, with a 1,500cc engine, is sold at Rp 35.75 million (US$15,210) on the road, half the price of most Japanese sedans of the same type.

Challenging Timor Putra, PT Citramobil Nasional -- a company controlled by Hutomo's elder brother, Bambang Trihatmodjo -- introduced its own national cars called Bimantara Cakra (with a 1,500cc engine) and Bimantara Nenggala (1,600cc) in cooperation with Hyundai Motor Company of South Korea. Citramobil offers Cakra at Rp 44 million on the road and Nenggala at Rp 59.5 million.

Today, PT Indomobil Niaga Internasional, a subsidiary of the giant Salim Group, will enter the fray by launching its cheap sedan called Suzuki Baleno to coincide with the opening of the 9th Jakarta Automobile Expo, which will run until August 4.

The 1,600cc Baleno -- complete with power steering, power windows, central door-locking system, air-conditioning, a radio tape player and noise reduction system -- sells at Rp 43.5 million off the road.

Indomobil, in cooperation with Japan's Suzuki Motor Corporation, also plans to produce two Indonesian-brand automobiles, Bintan and Karimun.

Indomobil president Subronto Laras said that the Bintan sedan would be produced with 1,300cc, 1,600cc and 1,800cc engines, while the Karimun would be similar to the Suzuki Sidekick jeeps.

"We obtained approval in principle for the two brand names two months ago. We redesigned the two cars two years ago," Subronto said, adding that 40 percent of the cars' materials are to originate from Indonesia.

And the competition will not stop here as the indigenous Bakrie Group, which has yet no auto firm, plans to produce another national car in cooperation with a European auto firm.

"This is good for customers," Poeng W. Lubis, a director at Citramobil said, commenting on the current auto market development.

"This heightening competition will drive us -- all auto firms -- to improve our efficiency. So it is good for us to prepare competition in the global market," he said after attending the two-day meeting of the ASEAN Automotive Federation (AAF), which ended here yesterday.

The AAF brings together auto associations from members of the Association of Southeast Asian Nations, except Brunei. They are auto associations from Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Sharing Poeng's view, Minister of Industry and Trade Tunky Ariwibowo said yesterday that the government welcomes any fair competition, which is good for the people.

"If the people are happy, the government is also happy," Tunky said.

He said the entrance of new, cheap cars into the market will not drive out the Timor car, saying that the local auto market, which may shrink this year, will surely grow in the future. (rid)