French automaker Renault SA to reenter Indonesian market

JAKARTA (JP): French automaker Renault SA is set to reenter the Indonesian market, following a deal with Japan's Nissan Motor Co Ltd. and Nissan distributor PT Indomobil Sukses Internasional to sell Renaults cars in Indonesia.

Renault vice president for Asia Pacific, Patrick Debrot, said on Wednesday his company expected to capture more than 1.5 percent of the local auto market within the next three years.

"Renault's development in Indonesia will draw on already existing Nissan and Indomobil resources in order to maximize synergies, while guaranteeing the separate identity of each brand at all sales points," he said at a media conference.

Renault began pulling out of Indonesia when the economic crisis struck the country in 1997.

The company now expects to return with monthly sales of 100 units starting in July, Debrot said.

Renault is confident it will have secured a 1.5 percent share of the local market by 2004, he said, adding that the company estimates between 300,000 and 400,000 total units will be sold in 2004.

Debrot said Renault aimed to establish seven outlets by the end of this year, located in Jakarta, Bandung, Bali, Batam, Surabaya, Sulawesi and East Kalimantan. In total, the company hopes to establish 25 outlets and 18 workshops across the country.

Renault has entered into a strategic alliance with Nissan by acquiring a 36.8 percent stake in the company, part of its global strategy to penetrate Japan and other Asian markets.

This alliance signed an agreement with Indomobil and PT Auto Euro for the import and distribution of Renault cars.

Auto Euro will handle the import and distribution of Renault cars by sharing Indomobil's offices.

"Indomobil will be in charge of back-office work such as finance, IT (information technology) and logistics," said Indomobil president Soebronto Laras.

He said Renault's showrooms and workshops would coexist with those owned by Nissan. But he added that Renault would have two separate outlets in Jakarta, offering showrooms and workshop services.

He said for Renault's launch, Indomobil planned to open six showrooms and three workshops in Jakarta.

This will increase to seven showrooms and four workshop in Java by the end of this year or early 2002, he said.

Renault's return to the Indonesian market comes during a time of increased pressure on the auto industry from the weaker rupiah and the government's plan to hike luxury sales taxes.

The rupiah's continued depreciation against the US dollar is forcing car manufacturers to increase prices -- at the risk of decreased sales volume.

The government is also looking at tapping Rp 300 billion (about $26.7 million) in tax revenue from the auto industry, which would likely send auto prices up even further.

In response to the gloomy outlook, many car manufacturers have scaled back this year's sales prediction from 300,000 units to between 240,000 and 280,000 units. Last year, car sales stood at 300,000 units.(bkm)