Indonesians put price first when buying a car

Indonesians put price first when buying a car

The Jakarta Post, Jakarta

As each driver stops at Toto's booth to pay the parking fee, the
21-year-old parking attendant counts down eagerly for the day
when he will join them on the other side of the booth as a car
owner.

"Cars are cheap now, so why should I bother to buy a
motorcycle?" said Toto, who earns about Rp 2 million (US$210)
monthly as a parking attendant at an office building on Jl. Jend.
Sudirman, Central Jakarta, and also from his other side job.
"Plus, they (cars) are safer and more prestigious."

Potential buyers like Toto should prompt the automotive
industry, which has forecast that this year's sales will increase
by 10 percent to 530,000 units, to carefully price their
products, according to a recent survey by market research firm
ACNielsen.

The firm's online survey -- covering 14,134 respondents
worldwide -- revealed that Indonesia was among the top three
countries, of the 28 polled, with the highest percentage of
people intending to own a car.

In recent years, the availability of affordable cars and easy
financing have spurred auto sales in Indonesia, making it one of
the world's hottest car markets with a 36 percent jump in sales
in 2004.

According to the survey, 82 percent of potential car buyers in
Indonesia, compared to 74 percent in the Asia Pacific region,
mentioned price as the most important factor when buying a car.

Managing Director for ACNielsen's Southeast Asia operations,
Farquhar Stirling, said car dealers should therefore maintain
their approach of supplying "affordable vehicles for the whole
population".

More surprisingly, he added, was the fact that only 26 percent
of potential car buyers in Indonesia, compared to the regional
average of 49 percent, said that vehicle performance was an
important factor, the lowest among the 14 Asia-Pacific countries
surveyed.

"It's interesting that Indonesia is down there," said
Stirling, adding that respondents surveyed online tended to be
better educated and wealthier than the general population. "Again
it validates the fact that the country is very price conscious."

He explained that to the Indonesians surveyed, the second most
important factor was brand image, or the prestige, of the car.

"That's why branding strategy is also important here," said
Stirling.

The survey revealed that 24 percent of the Indonesians
surveyed considered Toyota as the top brand -- thanks to its
affordable Kijang Innova and Avanza MPVs -- followed by Honda (13
percent), which saw a 215 percent increase in sales last year
after the launch of their Jazz compact car.

Stirling said the growing number of motorcycle owners --
boosted by cheaper prices and easy credit facilities -- also
constituted a strong base for potential car buyers.

"Trading up to a small car (for motorcycle owners) is the next
obvious step," he said, pointing to the fact that many
Indonesians treated their motorcycles as "family vehicles" that
could carry up to five people regardless of safety.

For Toto, the availability of low priced cars and easy credit
terms -- which sometimes only require a 5 percent down payment
and installments of up to five years -- has made him consider
buying a car.

"I've already saved enough money to make a down payment for an
Avanza," said Toto, referring to the entry-level car with a price
starting at Rp 93.5 million. (002)