Cheaper MPVs to drive car market this year

Cheaper MPVs to drive car market this year

Sari P. Setiogi, The Jakarta Post, Jakarta

Multipurpose vehicles (MPVs) could soar in popularity this
year as new economy models are launched with relatively
affordable prices of below Rp 100 million (US$11,990).

"Last year, MPV (sales) growth was almost zero percent, but
this year I predict it will reach about 5 percent," the chairman
of the Indonesian Automotive Manufacturers Association
(Gaikindo), Bambang Trisulo, said on Tuesday.

Toyota is launching the Avanza minivan with a retail price of
between Rp 80 million and Rp 100 million, while Daihatsu
introduces Xenia with a retail price of between Rp 60 million and
Rp 90 million. Avanza is equipped with a 1,300 cc engine, while
Xenia has either a 1,000 cc engine or a 1,300 cc engine.

Other top car makers are also planning to introduce less
expensive MPVs.

"Although MPV sales growth will 'only' be 5 percent, it is
large in volume as the MPV segment still holds about 50 percent
of the domestic market share," Bambang said.

In 2003, national car sales reached 350,000 units, according
to Gaikindo. It is expected that this figure will grow to 390,000
units this year despite the elections.

"The economic indicators are relatively stable and the
elections also seem to be more well prepared. I assume there will
be no huge, serious troubles during the elections," said Bambang.
He is optimistic that people will keep buying new cars,
particularly low to mid-priced cars.

Last year, the stars of the market were single utility
vehicles (SUVs), commercial cars and mid-class sedans. This year,
because of the elections, sales growth for mid-class vehicles is
not expected to be too big.

"People will refrain from buying costly cars this year,"
Bambang said.

Separately, the director general for small and medium
industries and trade at the Ministry of Industry and Trade, Aang
Tjahajadi, said the growing car market in the country should be
followed by a growing local components industry.

For motorcycle components, Indonesia is already the third
largest manufacturer in the world after China and India.

"The local content of motorcycles manufactured here now
reaches almost 90 percent," said Aang.

However, he said the country still found it difficult to
follow the latest technology in the car industry.

"In the global arena, models (of components) are changing very
rapidly. For small industries, it is somehow difficult for them
to keep up to date," said Aang.

Indonesian Vehicle Component Market Size (US$ million)

Year Revenue Exports Domestic

1999 7.276 336 6.941

2000 16.235 613 15.622

2001 14.400 681 13.719

2002 14.100 629 13.471

source: Indonesian Automotive Parts and Components Industries Association