Entry of Chinese cars in RI may threaten Japan's dominance

JAKARTA (JP): After its successful debut in the motorcycle market, China will come again within the next few months to introduce its multipurpose vans to Indonesia.

Automotive analysts estimate that the entry of Chinese vans will pose a serious threat to the dominance of Japanese brands in the domestic car market, especially to manufacturers of light vehicles.

"Chinese vans are quite cheap. This will make it easy to compete with the existing brands," Bambang Trisulo, chairman of the Association of Indonesian Automotive Industries (Gaikindo), told The Jakarta Post on Saturday.

Some local car distributors plan to import several Chinese makes to introduce more choices to the market, which is currently dominated by Japanese and European cars.

Last year, Chinese motorcycle producers rattled the car industry when they flooded the local market with their cheap but fashionable motorcycles.

Existing local car producers, which mostly make Japanese motorcycles, charged their Chinese rivals of imitating their motorcycle components.

Chinese motorcycles have become more popular due to an aggressive marketing strategy.

According to the Ministry of Industry and Trade, two Chinese four-wheeled vehicles -- Changan and Wuling -- have received approval to be imported into Indonesia.

Changan will be imported by PT Dharma Nugraha Paramitha, while Wuling will be imported by PT Dayu Bahtara Kurnia.

Changan vans have an engine capacity of between 800 cc and 1,000 cc, while Wuling vehicles are between 800 cc to 1,300 cc.

Both models are multipurpose vehicles, carrying price tags of between Rp 43 million (US$4,300) and Rp 45 million, or less than a half of the prices of similar vehicles already sold in the country.

The Chinese vans will compete with the Daihatsu Zebra and Espass, the Suzuki Carry, Futura, Karimun.

"With their low prices, the Chinese cars could easily take up at least 12 percent of the multipurpose van market within a year," Bambang said.

Bambang, however, warned that it would be difficult for Chinese carmakers to gain popularity if they did not establish a strong network for after sales service.

Budhiman Sirod, chairman of the Indonesian Motor Vehicle Importers Association (AIKI) told Bisnis Indonesia that the cars could be sold for below Rp 43 million.

He also said that approximately 700 Chinese cars would be imported soon, adding that the after sales service had been prepared to satisfy customers.

Bambang said the arrival of the Chinese vans would force Japanese assemblers either to produce cheaper cars or to improve the efficiency of their existing models.

"The competition will be good for the customers because they can choose better products with cheaper prices," he said.

According to Gaikindo, car sales last year rose by 213 percent to 211,900 vehicles from last year's 67,718. (05)