Mercedes-Benz prices set to rise as production restarts

Mercedes-Benz prices set to rise as production restarts

By John Aglionby

There's good news and there's bad news this week, as far as
anyone wanting to buy a Mercedes-Benz as a generous Valentine's
Day present is concerned.

The good news is that the Indonesian sole agent of the German
automotive giant, PT Star Motors Indonesia, has ended its six-
week-long production "holiday" and is manufacturing again, albeit
at only 60 percent of precrisis volume.

The bad news is that when cars go back on sale on Monday the
prices will have jumped significantly, although the specifics
will not be announced until first thing Monday morning.

"We ourselves are still not sure how much prices will increase
by," said marketing director Friedel Engisch. "We are having a
visit by a board member (from Germany) this week to discuss it
and we will announce it first thing on Monday."

Engisch said the increase would be in line with those of other
luxury car manufacturers which is anywhere between 10 percent and
20 percent.

This would mean the C230 Elegance, one of Mercedes cheaper
models, would rise to about Rp 200 million (US$27,800) and the
E320 V6 Elegance double that at about Rp 400 million. These are
both off-the-road prices.

Star Motors says that one should add between 20 percent and 30
percent to get the on-the-road cost.

Engisch said that only a few models, such as the 200 series,
had been discontinued and that some new ones would be added,
including the much-awaited CLK.

"It was always our plan to bring the CLK to Indonesia this
year and we still intend to do so, although we do not know when
yet," he said. "You have to bring in the eye-catchers. After all,
why buy another S-Class when you already have three in the
garage; you want something different."

The company plans to run at reduced production levels for the
first six months of the year and then reassess the second
situation for the rest of 1998. "We trying to be prepared to be
as flexible as possible, but we will have to just wait and see,"
Engisch said.

Star Motors has not laid off any workers yet but is not
actively recruiting anyone or filling vacancies left by employees
retiring.

However the company's prospects are good, Engisch said. "The
decision to stop production over Christmas and Lebaran was a very
good one. It reduced our losses and meant we ended the year with
a very healthy profit." This would be reinvested back into the
company to develop new models.

The rupiah's collapse has also prompted Star Motors to
readjust its export ambitions for its MB800 truck and MBO 800 bus
chassis, upward.

"We already have fixed orders for 1,500 units and are looking
to increase this," Engisch said, adding that he was soon going to
Egypt with the aim of securing orders for up to another 500
vehicles, which have a local content of just over 30 percent.

He also said even more trucks could be exported -- and thus
more dollars brought into the country -- if the government both
cut back on import duty and granted export incentive facilities,
as South Africa did to stimulate its economy.