Indonesian car sales post all-time record

JAKARTA (JP): Automobile sales in Indonesia are expected to reach an all-time record of 320,000 units this year, up by more than 50 percent from last year, the industry's association announced yesterday.

"We have based our estimates on actual sales during the first 11 months, which exceeded 295,160 units," said Sumitro, an executive of the Association of Indonesian Automotive Industries (GAIKINDO).

Sumitro attributed the sharp sales increase to robust economic growth and the expansion of bank credits with net interest rates of 18-20 percent a year.

He said around 80 percent of the sales were credit-based and only 20 percent involved cash payments.

"We are equally upbeat about next year's prospects though the sales growth may reach only around 20 percent," Sumitro added.

The previous high of 274,603 units sold was in 1990. Car sales then declined to 263,073 in 1991 and 171,900 in 1992 before rising again to 210,000 in 1993.

The association's chairman, Herman Latief, said the sales record was much higher than what the association had estimated.

"Our estimate early this year was 230,000 units. But we revised the sales estimates to 265,000 units in the second quarter after seeing brisk sales during the first quarter," Latief added.

Commercial vehicles accounted for 87.48 percent of the total sales and passenger cars for the remaining 12.52 percent.

About 95 percent of the cars sold consisted of Japanese makes, notably Toyota, Mitsubishi, Daihatsu, Suzuki and Isuzu.

"This composition was responsible in part for the rising prices of automobiles in the country," Latief said, referring to the yen appreciation against the American dollar.

The deregulation of the automobile industry in June 1993, apparently has not yet succeeded in rationalizing the number of car makes assembled.

Makes

There are now more than 26 makes of automobiles assembled locally. Since the five Japanese makes account for 95 percent of the total sales, the other 21 brands together were responsible for less than 15,000 of the units sold.

The association confirmed that two Korean car makes, Hyundai and Kia, will enter the domestic market sometime next year, thereby making the competition even tougher.

"We are ready to compete in the open market because the rules have been clear cut and, hopefully, they will also be enforced properly and in a transparent way," Latief said.

Based on the June, 1993, deregulation measures, the level of tariffs on imported parts and components is determined by the level of the local content of assembled vehicle -- the higher the local content, the lower the tariffs.

However, Latief acknowledged some difficulties in the development of local car components due to low economies of scale and because most of the producers are small and medium-size enterprises.

"The system of local component supply should be improved further to lower the cost of car production," Latief noted.(vin)