Indonesia's car sales back on track after steep fall

Indonesia's car sales back on track after steep fall

By Russell Williamson

Indonesia's vehicle sales are returning to normal after
falling dramatically following the announcement in February of PT
Timor Putra's plans to build a cheap national car.

Timor Putra was granted exclusive tax concessions to enable
the company, headed by President Soeharto's youngest son Hutomo
Mandala Putra, to build an affordable family sedan and stimulate
Indonesia's automotive manufacturing industry.

With the prospect of a cheap family sedan on the market to
lure the volume customers away from the commercial-based family
wagons such as Toyota Astra's Kijang, the immediate reaction of
the market was to stop buying.

Many earlier reports suggested customers would wait for the
introduction of the Timor car to see if other car prices fell to
remain competitive. The Timor car is expected to go on sale in
September for about Rp 35 million.

This reaction was evident in sales figures for February which
fell by more than 10,000 cars or nearly 40 percent compared with
January figures.

According to official sales figures from the Association of
Indonesian Automotive Industries total vehicle sales in February
were just 18,429 after January's total of 28,974.

Carmakers were then predicting that sales would continue to
remain flat for some time.

March figures, however, have returned to a high of 28,079 with
sedans, at 3,473 cars, making up over 10 percent of sales.

This is almost back to the level of January, when sedan sales
reached 3,877 and many carmakers are now optimistic about the
future.

The director of sales and marketing for PT General Motors
Buana Indonesia, Terry Johnsson, said he had been surprised at
the level of buying in March.

"The general wisdom was that March was going to be quite
soft," Terry said.

"In actuality February was pretty much where we forecast it
but March came in at about 28,000 cars and we had forecast about
20,000 so it was much more buoyant than we had imagined," he
said.

Terry said that although he had no official figures as yet,
sales for April and May appeared to be strong.

He said the carmakers' initial assumption that the Timor Putra
announcement would deal a significant blow to sales over a long
period appeared to be wrong.

"Our interpretation is that there is not a lot of buyers who
are actually waiting (for the Timor car)," he said.

"We expected that maybe up to 20 percent of the market would
sit back and make up their minds later but it hasn't been the
case so far," he said.

Terry said the market now appeared to be settling down a bit
and the speculation about price reductions on cars across the
board were subsiding.

He said however, when the Timor car was launched he did expect
there to be some effect on the overall market but nobody was
really able to predict what might happen.

"When the car comes out and there are dealers and an
advertising campaign I am sure then you would expect to see
behavior adjusted a bit, but it seems as if the customer is
actually looking for more than just a low-priced vehicle," Terry
said.

He said the Indonesian sedan buyer was more discerning and was
looking for more in a sedan car than just a cheap price.

"I sense that the customer here is a bit beyond just an old
model with a new skin and a low price," Terry said.

"The sedan customer here is a little bit more discriminating,"
he said.