Hyundai to face tough competition

JAKARTA (JP): The entry of South Korea's Hyundai Motor Company into the country's car market will increase the competition, but it won't significantly erode the market shares of established car makes, an automotive businessman said yesterday.

The president of Indomobil Group, a subsidiary of Salim Group, Subronto Laras said the majority of consumers in Indonesia still prefer multi-purpose cars, such as Kijang and Panther minibuses.

"If they (Hyundai) want to enter this market, they will get difficulties," he told reporters after the signing ceremony of a joint venture between Indomobil Group and Sumi Rubber Limited.

Hyundai in cooperation with PT Citra Mobil Nusantara, a subsidiary of Bimantara Group which is controlled by Bambang Trihatmodjo, has started assembling 1,596-cc Hyundai Elantra sedans with a price of Rp 60 million (US$27,270) each.

If the lower price is Hyundai's market strategy, Subronto said, that will not be effective because Indonesian consumers don't look primarily at the price.

He said the failure of Mazda MR, a low-priced sedan made by Indomobil, indicated that a cheap price alone will not influence the market.

"The consumer preference is multi-purpose cars for family use," he pointed out.

Subronto said that in the 1,600-cc sedan market, with annual sales of 12,000 units, the leaders are Toyota Corolla, Honda, Mitsubishi Lancer, and Mazda, with prices ranging from Rp 60 million to Rp 80 million.

He added that the 1,300-cc sedan market is dominated by Daihatsu Classy and Suzuki Escudo, Katana, Sidekick and Esteem.

"So, which market segment does Hyundai intend to enter?" he asked.

According to Subronto, Indonesian consumers also look at the resale price of a car when they choose the make of car they want to buy. (04)