Korean car firms to erode Japanese market share

JAKARTA (JP): South Korean car companies, Daewoo and Hyundai, will join force to weaken the market shares of Japanese automobiles which now dominate the domestic market, an automotive businessman said yesterday.

"We at Daewoo and Hyundai are planning to pool our resources for penetrating the Japanese market dominance," Franky Suhalim, a sales and marketing manager of PT Starauto Dinamika which is the assembler of Daewoo cars, told journalists.

Franky said the Korean cars, supported by good quality and services and cheaper prices, would be able to topple the Japanese market leaders.

Only two Japanese makes, Mitsubishi and Toyota Kijang, are taking part in the nine-day auto exhibition at the Jakarta Convention Center. The other exhibitors are Daewoo, Hyundai, Mercedes, Ford, Opel and Chrysler.

He said that Daewoo Motor will launch in November the 2000-cc Daewoo Espero sedan with a price tag of Rp 70 million (US$31,400), which is 30 percent lower than the average price of other cars of its category and type.

He said Daewoo, which had invested Rp 130 billion in its assembling plant at Cakung, north of the city, will also launch the 1,500 cc Nexia sedan with a price of less than RP 50 million.

"We will be able to offer such a low price even though our local content now is only about 10 percent. You can imagine, how cheap will be the prices of our cars when we gradually increase our local content," Franky said.

He said that Daewoo planned to build a new assembling plant at Cikarang, Bekasi, with an investment of about Rp 260 billion.

The new plant will increase Daewoo car production from 10,000 units a year at its Cakung plant to 35,000 units, he said.

Franky is optimistic that the sedan market will eventually become much larger than that of mini buses (modified from commercial vehicles) as the per capita income of the people steadily increases.

"The more competitive sedans will be if their prices can be reduced to as low as those of vans," he added.

According to Franky, the production costs of Korean cars are much cheaper than Japanese ones because of the much lower labor costs in Korea and the stability of the Korean won.

"Moreover, the Korean car industry is supported by the world's largest steel industry," he pointed out.

Anky Camaro, an executive of the Indomobil Group which sells mostly Japanese cars, said that his company would have to reduce the prices of its cars to be able to compete with the Korean automobiles.

"There will be tough competition, we will have to decrease our car prices," Anky told reporters at the exhibition yesterday.(04)