Fear of unrest hurts domestic car sales

JAKARTA (JP): Domestic car sales in May declined by 24 percent to 4,021 vehicles after reaching an 11-month high of 5,264 vehicles in April, amid fear of unrests ahead of the general election, according to the latest report issued by the Association of Indonesian Automotive Industries (Gaikindo).

The May sales of passenger cars fell slightly to 851, from 860 in March, while commercial car sales dropped 28 percent to 3,170, from 4,404 in April.

Gaikindo's chairman Bambang Trisulo told The Jakarta Post on Saturday that sales dropped because many potential buyers delayed purchases on concerns about security ahead of the June 7 general election.

He said that the drop was also partly caused by closures of car dealers during and after the general election.

"During the campaign period (May 19 to June 4) and a few days after the general election, many car dealers and showrooms throughout the country decided to closed their shops temporarily due to the lingering fear of unrest," he said.

Bambang also attributed the lower sales to potential buyers "anxiously waiting" the government's new automotive policy before making a decision to buy cars.

"Potential buyers are delaying purchasing because they are misguided that the new automotive policy will lower car prices.

"The new automotive policy will not immediately lower prices because current domestic car prices are already below production costs," he said.

The new automotive policy, which will cut import duties on several automotive components and abolish the local content requirement, is expected to lower prices of four-wheeled vehicles and motorcycles.

According to Gaikindo data, car exports in May rose 6.5 percent to 3,563 cars, from 3,345 in April, bringing the total number of cars sold both locally and overseas to 7,584 in May.

The country's largest automaker, PT Astra International, continued to dominate automobile sales, selling 1,813 vehicles locally in May, or 45 percent of total domestic vehicle sales for the month. It sold 3,411 commercial cars and 148 passenger cars during the month.

Car makes sold by Astra included Toyota, Daihatsu and Isuzu from Japan, Germany's BMW and France's Peugeot.

The company also exported 3,411 vehicles in May, an increase from 3,244 in April.

Toyota led the domestic commercial car market with 1,128 vehicles sold in May, followed by Mitsubishi with 920.

Astra's Toyota exported 3,400 vehicles in the month, more than any other vehicle manufacturer.

Domestic car sales have been very sluggish since May 1998, when the country was rocked by widespread riots. The sharp depreciation of the rupiah against the U.S. dollar caused a sharp increase in car prices, dragging down car sales.

Domestic sales in April reached their highest level in an 11- month period, after slowly improving since the beginning of 1999.

Analysts had predicted earlier that automotive sales would decline to between 40,000 cars and 50,000 cars this year, from 58,000 cars last year, because demand remained low.

Annual car sales reached a peak of 405,000 in 1996 before an economic crisis hit the country in August 1997.

During the first five months of 1999, local car sales totaled 18,125, comprising 2,995 passenger cars and 15,130 commercial cars.

PT Timor, which recently lost special tax privilege given by the government for its national car project, continued to lead the sales of passenger cars in May, presumedly due to its competitive sedan prices. The company sold 247 cars in May, down from 377 in the previous month.

It was followed by Honda with 159 vehicles and Ford with 112 cars. No Ford vehicles were sold in April.

The data also shows domestic motorcycle sales fell 1.6 percent to 34,585 in May, from 35,162 the previous month.

In the period from January to May, 142,316 motorcycles were sold.

Astra sold 21,851 of its Honda motorcycles in May, up 7 percent from 20,423 in April. (gis)