More new names to enter the car market this year

I. Christianto, Contributor, Jakarta

Concerns over possible unrest in the upcoming national elections are likely to slow the high growth in the country's car market this year.

Sedans will be the most affected by the projected slower demand while sales of Multi-Purpose Vehicles (MPVs) are expected to continue to increase thanks to the entry of several new names in this particular car market.

The Association of Indonesian Automotive Manufacturers (Gaikindo) estimates the total growth of car sales will increase only by about 10 percent this year to between 380,000 and 390,000 units. Last year, sales rose by 19 percent to 354,333 units.

Though several analysts have forecast the country's legislative elections in April and the first ever presidential election in July will not involve serious threats to peace and order, many people remain cautious ahead of the polls.

In the past, Indonesian elections have sparked political and social unrest, and many continue to worry that political tensions can trigger similar violence this year. Consequently, there is a degree of wariness causing weaker growth in new vehicle sales this year.

According to the association, sales of MPVs are predicted to increase by 5 percent this year, far better than the zero growth last year. Sales of mid-priced sport utility vehicle (SUV) will also be positive, but not for sedans.

Factors such as a better economy and enhanced security, stable fuel prices, lower inflation, lower interest rates and the rupiah's relative stability are among the things that will encourage people to buy MPVs. However, some people, mostly those who can afford sedans and high-priced cars, are still very worried about possible security impacts during the electoral process.

Last year, the stars of the market were sport utility vehicles (SUVs), commercial cars and mid-class sedans. This year, because of the potential for political problems, sales for mid- class vehicles are not expected to be very huge.

Demand for new sedans normally decrease when consumers are concerned about security. Nonetheless, such a condition will not deter carmakers from launching new models in Indonesia this year.

Last year's higher demand in the segment was mostly fueled by sales of subcompacts, or 1,500 cc vehicles, and the competition for SUVs, such as the Suzuki Baleno Next-G, All New Honda City and Toyota Vios. There was also a healthy rivalries between the Suzuki Escudo 2.0 and Escudo XL7, Ford Escape 2.0, Mazda Tribute 2.0, Honda CR-V and Nissan X-Trail, all of which drove the market due to greater promotions to win market share.

This year the lower priced MPVs are predicted to lead the market. Such MPVs include the Toyota Avanza and Daihatsu Xenia, which set prices under Rp 100 million (US$11,900), which quite obviously entices new buyers.

In addition to Avanza and Xenia, soon there will also be the Every and Picanto from Suzuki and KIA, respectively, to compete in this segment, and possibly drive prices lower still.

The existing players in the minivan sector with engine sizes below 1,300cc include the Carry and Karimun (also from Suzuki), Spark by Chevrolet and Daihatsu Ceria.

Other top carmakers are also planning to introduce less expensive MPVs. This includes Honda, which plans to introduce the Jazz after launching the new Stream, which can accommodate seven adults comfortably within its clean, contemporary shell. It also boasts a 2.0 i-VTEC engine to guarantee an exhilarating ride. Meanwhile, the Honda Jazz will seat five adults comfortably.

Leading carmakers, nonetheless, will keep introducing luxurious cars in Indonesia. For instance, PT Garuda Mataram Motor, the sole distributor of Audi here, has plans to market more Audi A8s. The car is pure luxury in an all-wheel drive package dubbed Quattro.

This aluminum-bodied sedan competes with the BMW 7 series and Mercedes Benz S-Class, Jaguar XJ and Infinity Q45.

Meanwhile, PT BMW Indonesia has also introduced the BMW 730 Li, which offers the best and latest cutting-edge technology for ultimate driving comfort. Its iDrive system offered the driver valuable information such as car service status, climate control, communication options and entertainment at a touch of a button.

The BMW 730Li is equipped with six-speed steptronic automatic transmission, a sunroof and a car telephone as well as a self- leveling system to maintain the car's height under all load conditions.

BMW will also unveil its X3. The X3 is underscored by the developed intelligent xDrive all-wheel-drive system which ensures the variable distribution of drive forces between the front and rear axles more quickly and efficiently than ever before. Referred to as sport activity vehicle (SAV), the car is powered by a six-cylinder DOHC.

Volvo is introducing XC90 T6, a sport-utility with a twin- turbocharged six-cylinder engine. Power reaches all four wheels through constant all-wheel drive through a four-speed automatic transmission with a manual shift mode that Volvo calls Geartronic.

Through PT Car & Cars Indonesia Volkswagen will also introduce the New Golf and Tuareg, the first sport-utility from VW later this year.

All in all, the automotive sector in Indonesia still should grow this year, albeit a bit slower. It is estimated that the major players in new passenger and commercial vehicles will remain the established brands including Toyota, Mitsubishi, Isuzu, Suzuki and Daihatsu.

Last year, in the sedan category, Toyota leads in the market, followed by Honda, Hyundai, Suzuki, Mercedes Benz, BMW, Mitsubishi, Timor, Ford, Volvo, Chevrolet, KIA, Jaguar, Peugeot, Audi, Daewoo, Nissan, Mazda and Volkswagen. Leaders in the non- sedan sector were Toyota, Mitsubishi, Suzuki, Daihatsu, Isuzu, Honda, Nissan, Hyundai, KIA, Hino, Ford, Chevrolet, Peugeot, Nissan Diesel, Mercedes Benz, Mazda, Volkswagen, Renault, BMW, Ssanyong, Land Rover, Daewoo, Perkasa, Volvo, Subaru, AMC Jeep and Audi.