Old players remain dominant in local market

Rikza Abdullah, Contributor, Jakarta

The success of the locally assembled multi-purpose vehicles (MPVs) in the domestic market has encouraged distributors to import similar types of cars but with a higher quality and more alluring designs.

But old players such as Kijang, Panther and Kuda vans continue to dominate the market despite there being so many choices available for car lovers.

Local producers, under a government policy requiring them to gradually increase the local-made content of their vehicles, have modified light trucks into MPVs or mini-buses.

The Astra Group of companies, for example, produces Kijang MPVs based on truck chassis with Toyota engines, and Panther MPVs based on truck chassis with Isuzu diesel engines, while PT Krama Yudha Tiga Berlian produces Mitsubishi Kuda MPVs.

For customers with lower incomes, Astra modifies Daihatsu light trucks into Zebra mini-buses, the Indomobil Group of companies modifies Suzuki light trucks into Carry and Futura mini-buses, and PT Krama Yudha Tiga Berlian modifies Mitsubishi light trucks into Colt mini-buses.

Because all these products have won lion shares on the domestic automotive market, local distributors of foreign brands are trying to take a slice of the market by importing MPVs with designs and technology features better than those domestically produced.

Indomobil, for instance, imports Suzuki Escudo, Suzuki Aerio and Nissan Terrano MPVs, and PT Kia Motors Indonesia imports Carnival and Sedona. PT Astra France Motors imports Peugeot 307SW, and PT Honda Prospect Motors imports Honda CR-V and Honda Stream MPVs. The other MPVs imported for the domestic market include Chevrolet's Zafira and Tavera, Hyundai's Santa Fe, Mitsubishi's Pajero, Renault's Clio M/T and Scenic, Land-Rover's Escape, Ssangyong's Musso and Rexton, Mercedes-Benz's Vaneo, BMW's X5 and Toyota's Land-Cruiser.

According to the data released by the Indonesian Association of Automotive Manufacturers (Gaikindo), the domestic sales of Category I vehicles (including two-wheel-driven MPVs, minibuses and light trucks) increased by 12.63 percent to 117,669 units during the first semester of this year from 104,473 units in the same period last year.

Gaikindo secretary general Fransiscus Suseno said that about 80 percent of Category I vehicles sold on the domestic market comprised two-wheel-driven MP vehicles and minibuses, while the other 20 percent consisted of light trucks or pick-ups.

Indomobil Group chairman Soebronto Laras, who is also a former chairman of Gaikindo, said the fact that the sales of the Category I vehicles increased substantially, while the sales of passenger cars (sedans) declined in the first semester, indicated that Indonesians put higher priority on the multi-purpose functions of the vehicles (rather than their technology features).

The sales of sedans, according to Gaikindo, declined by 25.73 percent to 13,515 units in the January-June period from 18,198 in the same period last year.

Suseno commented that the trend of customers' demands towards MPVs was caused primarily by economic considerations. As compared to sedans that could accommodate four to five passengers, MPVs could accommodate seven to 10 passengers. And the rates of luxury-goods-sales tax on sedans were also higher than that on MPVs.

The sales of two-wheel-drive MPVs are subject to 20 percent luxury tax, while the rates of luxury tax on sedans are set at 30 percent for those with engines of no more than 1,000 cc (cubic centiliters), 40 percent for those with engines of more than 1,000 cc but not more than 3,000 cc, and 75 percent for those with engines more than 3,000 cc, he said.

Furthermore, Soebronto said, Indonesians seemed to have been more content with the designs of the locally-produced MPVs or vans. Their sales prices, ranging from Rp 75 million (about US$8,330) to Rp 200 million each, were also within the reach of most Indonesian customers.

Imported MPVs, in spite of their better specifications, therefore, would find it difficult to compete with locally- produced vans because the former's prices exceeded Rp 200 million each, he said.

He said the monthly sales of Kijang, for example, could reach about 6,000 units, Panther about 2,000 units, Kuda about 1,000 units and Daihatsu's Taruna about 800 units, while his business group could sell about 2,500 Suzuki (Carry and Futura) mini-buses a month.

According to the data released by the Astra Group, its sales of Toyota commercial vehicles (comprising both Kijang vans and pick-ups) reached 37,991 units during the January to June period, Isuzu vehicles (including Panther vans and pick-ups) reached 14,140 units and Daihatsu vehicles (including Taruna MP vehicles, Zebra mini-buses and pick-ups) reached 10,142 units.

On sales by other companies, the data show that 37,654 Mitsubishi commercial vehicles (including Kuda and Colt vans and pick-ups as well as heavy trucks) and 29,239 Suzuki vehicles (including Escudo MP vehicles, Carry and Futura mini-buses and pick-ups) were sold during the period.

Soebronto said the sales of imported MPVs would not exceed 500 units per month for each type. Honda's CR-V led the market with the sales of about 500 units per month, followed by Suzuki's Escudo with 400 units.

According to Astra's data, the sales of Honda MPVs reached 3,449 units in the first semester of this year, Nissan 1,726 units, Opel 868 units, Chevrolet 339 units, Ssangyong 64 units and Land-Rover 23 units.

Soebronto said four-wheel-drive MPVs with engines of more than 3,000 cc had more difficulty in increasing sales in the country after the government raised the rate of their luxury tax from 50 percent to 75 percent last August.

Gaikindo's report shows the sales of Category IV vehicles (four-wheel-drive MPVs) fell 39.22 percent to 747 units during the first semester of this year from 1,229 units in the same period last year.

Suseno said the absence of after-sales service warranties added to the difficulty of the sales of four-wheel-drive MPVs imported by non-Gaikindo companies.

"So, they (the importers) are actually competing in the thin market," Soebronto said. "And their entry into the Indonesian market will not reduce the shares of the locally made vehicles."

However, importers show optimism. Anto Nurdiyanto, a deputy director of PT Daimler Chrysler Distribution, for example, said that his company aimed at increasing the sales of Grand Cherokee to 130 units this year from less than 100 last year.

Luis F.F. Madaleno, president of PT General Motors Indonesia, said his company aimed to sell 5,000 Chevrolet vehicles this year.