Gaikindo predicts car sales to drop by 15% this year

JAKARTA (JP): Indonesian car sales are likely to drop by about 15 percent this year to 250,000 units, from more than 300,000 last year, Association of Indonesian Automotive Industries (Gaikindo) chairman Bambang Trisulo said on Tuesday.

He blamed the estimated drop on uncertainty caused by the social-political condition in the country and lower than expected economic growth.

"We had expected sales this year to match last year's figure, but (with the rupiah) above 10,000 (per U.S. dollar) we now predict only 250,000 units," Bambang told journalists after a media conference on the upcoming Gaikindo Auto Expo in July.

He said that if the rupiah continued to weaken in the next six months prices would be likely to increase, putting more pressure on the demand for cars.

About 68,000 cars were sold during the first three months of the year, averaging about 23,000 cars a month, Bambang said.

He explained that, while the average was higher than the average between January and March last year, it was a drop from the monthly average sales of about 30,000 recorded in the fourth quarter of 2000.

"If everything was favorable, the monthly sales average for the first three months of this year would have reached between 27,000 and 28,000 units," he added.

Bambang said that the tight market had forced distributors to employ various marketing strategies to maintain their sales.

"Observe (the marketing). What brand doesn't employ promotional tricks in marketing its products, whether it's discounts, prizes, lower rates in down payments, additional equipment and incentives? That is an indicator that the market is slow right now," Bambang explained.

Contrary to the bleak picture painted by Bambang, marketing and sales director of PT BMW Indonesia, Bintoro Tjitrowirjo, said he expected sales to increase by 37 percent this year, to about 3,300 units.

He said that, although the weakening rupiah was bound to have an effect on BMW sales, it would not be as damaging as the effect it would have on popular vans such as Kijang, Panther and Taruna.

"Our market, the luxury car market, is small, unlike vehicles which are produced in high numbers each month," Bintoro said, adding that between January and March the company had sold approximately 800 cars.

Gaikindo will hold its 11th automobile exhibition from July 21 until July 29 this year at the Jakarta Convention Center. The event will be organized by Dyandra Promosindo, which also organized the 10th auto show last year.

The exhibition will cover a 30,000 square-meter area, with more than 150 companies participating, Gaikindo secretary-general F. Soeseno said.

He said that the exhibition is not only aimed at attracting more sales, but also to promote brand image, adding that transactions made during last year's seven-day exhibition totaled Rp 400 billion (about US$37 million).

Bambang said that this year's exhibition would be the starting point for an international exhibition planned for 2002.

"We have to start exhibiting at an international level next year because by then our market will not only be Indonesia," he said, referring to implementation of the ASEAN Free Trade Area (AFTA) in 2002. (tnt)