Daihatsu Acknowledges Rupiah Weakening Forcing Industry to Make Adjustments
JAKARTA — The depreciation of the rupiah against the United States dollar is beginning to press on the domestic automotive industry. The situation is forcing industry players to make a range of adjustments, from cost efficiency to strengthening local components to safeguard business continuity.
Sri Agung Handayani, Marketing Director of PT Astra Daihatsu Motor (ADM), said the rupiah depreciation impact is not only felt by Daihatsu but by the entire Indonesian automotive sector. After all, there are still several vehicle components that depend on imports, making them sensitive to exchange rate changes.
She said ADM currently has a component localisation rate of more than 80 percent. However, some components are still sourced from abroad, so the exchange rate pressures continue to affect the cost structure of vehicle production.
To address the situation, Daihatsu has begun implementing a series of efficiency strategies within the company. Steps taken include restructuring manufacturing costs and discussions with the entire supply chain to accelerate the development of local components.
“So we restructure costs and implement efficiency in our manufacturing. Then we also have discussions with the total supply chain to find solutions in developing localisation of several components,” she said.
Sri Agung stressed that although cost pressures are starting to be felt, the company remains cautious in making business decisions, including regarding vehicle price adjustments. Daihatsu is said not to want to pass on the entire cost increases directly to consumers.
“But what Daihatsu will do will be done very carefully and prudently. In other words, not everything will be done and deployed to the customer,” she said.
ADM has also confirmed that to date there has been no increase in Daihatsu vehicle prices in the last four months. The move has been aimed at preserving the first-car buyer market, which has long been the backbone of Daihatsu’s sales in Indonesia.
In the midst of challenging economic conditions, the company assesses that the affordable-vehicle market still has fairly strong demand, especially from rural areas and developing regions, which are now becoming one of the sources of sales growth.
In addition to the domestic market, export performance is also an important pillar supporting the national automotive industry. Daihatsu notes that vehicle exports are still growing this year, as demand from a number of key destinations rises.