Local auto market seen to stay flat

JAKARTA (JP): Competition among local auto firms will get tougher next year because the market won't improve, the Indonesian Automotive Industry Association's chairman said yesterday.

Herman Z. Latief projected domestic sales of automobiles would drop 15 percent this year from last year's 270,313 vehicles.

"My prediction is that next year's auto sales will slightly surpass this year's level but not last year's," Herman said Wednesday.

As long as the government maintained its tight monetary policy next year, it would be hard for auto firms to improve their sales, he said.

"Moreover, we will have a general election next year. It's not something new. But, whenever there is a general election, economic activities slow down."

Domestic auto sales dropped 15 percent in the first 11 months of this year to 292,935 vehicles, compared to 348,705 vehicles in the same period last year, according to the association.

Auto analyst Suhari Sargo argued the drop was caused by the government's tight monetary policy rather than its national car policy.

The car policy, introduced in February, grants duty and tax breaks to PT Timor Putra Nasional to produce national cars, Timor sedans, in cooperation with Kia Motors Corp. of South Korea.

Timor Putra -- controlled by President Soeharto's son Hutomo Mandala Putra -- sells its 1,500cc-engine Timor sedans for Rp 35.75 million (US$15,200), half the price of similar Japanese sedans.

Suhari said sedan sales did not drop drastically as expected. In the first nine months of this year they dropped 2 percent to about 35,000.

The most serious drop was in first category commercial vehicles, including mini vans. Their sales dropped 22 percent to 199,721. (rid)