Indomobil starts price war amid tight competition

JAKARTA (JP): PT Indomobil Niaga Internasional, an automotive subsidiary of the giant Salim Group, began a price war at the onset of the 9th Jakarta Auto Expo on Saturday.

Amid tight competition in the subcompact class, Indomobil's president, Subronto Laras, said that his company is determined to secure and expand its market share by cutting prices.

"We will fight all out by cutting prices, and we have asked our component suppliers to support us and they agree. So, we cut our prices," Subronto said after the launching of the company's new Suzuki Baleno, a sedan with a 1,600 cc engine.

The sedan -- equipped with power windows, central door-locking system, air conditioning, a radio-cassette player and noise reduction system -- sells for Rp 43.5 million (US$18,510) off the road (or Rp 46 million on the road), far lower than comparable Japanese cars which sell for more than Rp 70 million.

"We have prepared 250 Balenos for this launching and have sold out," Subronto said, adding that his company plans to sell some 3,500 Balenos a year.

Indomobil has also cut the prices of its Suzuki Esteem by Rp 5 million to Rp 35.9 million (off the road) for the 1,300 cc version and Rp 39.9 for the 1,500 cc version.

However, the company has not slashed the prices of its Suzuki Sidekick multi-purpose vehicle or its Suzuki Carry Van. "They are still highly sought after," Subronto said.

Commenting on Indomobil's move, Herman Z. Latif, an executive at PT Krama Yudha Tiga Berlian, the Indonesian producer of Mitsubishi vehicles, said: "That's normal in business. We have done that kind of strategy before."

He said that his company will not stay silent but continue to compete in the increasingly tight market. "We will at least try to not increase our prices."

Tiga Berlian will maintain the price of its 1,600 cc Mitsubishi Lancer at Rp 74.5 million (on the road).

Competition in the domestic auto market has heightened since the introduction of the government's national car policy last February, which grants tax and tariff breaks to PT Timor Putra Nasional, a company controlled by President Soeharto's youngest son Hutomo Mandala Putra.

Cooperating with Kia Motors Corporation of South Korea, Timor Putra launched its Timor car -- dubbed the national car -- earlier this month. The Timor sedan, with a 1,500 cc engine, is sold at Rp 35.75 million on the road.

An executive of PT Timor Distributor Nasional, the sole distributor of Timor cars, told The Jakarta Post that his company, as of last Saturday, had received orders for nearly 6,200 Timors, 40 percent of which were fleet orders from a number of state agencies, institutions and also private firms.

He said his company will start delivery to customers in October, starting with 4,000 units per month. Indonesia's national cars, however, are currently produced in South Korea.

Challenging Timor Putra is PT Citramobil Nasional, a company controlled by Hutomo's elder brother Bambang Trihatmodjo. Citramobil introduced its own national cars this month called the Bimantara Cakra and the Bimantara Nenggala, in cooperation with Hyundai Motor Company of South Korea.

Citramobil offers the 1,500 cc Cakra at Rp 45 million on the road and the 1,600 cc Nenggala at Rp 59.5 million.

Poeng W. Loebis, a Citramobil director, said that his company prepared 150 Cakras and Nenggalas for the launch. All models sold out, he said.

Herman, who is also chairman of the Indonesian Automotive Industry Association, said the entrance of "cheap" sedans on the market could take away market share from multi-purpose vehicles if the latter's prices do not go down.

Commenting on the current development, Adirizal Nizar, a director at PT Toyota Astra Motor, said that his company will not cut the prices of its most popular multi-purpose vehicle, the Toyota Kijang. Kijang prices currently range from Rp 30 million to Rp 40 million on the road.

He said, however, that his company has prepared a strategy to maintain its leading position in the local auto market, though he declined to elaborate.

Toyota dominates local auto sales with 96,703 units last year, or 25.5 percent of last year's total sales of 378,704 units, followed by Mitsubishi with 73,705, Suzuki with 70,164 units, Daihatsu with 59,743 units and Isuzu with 42,966 units. (rid)