Our target is to dominate 30% market share: TAM

Our target is to dominate 30% market share: TAM

Indonesia's positive economic growth is reflected in many
sectors, particularly in the automotive industry. In the past two
years, vehicle sales have increased drastically, surpassing the
pre-recession level. The Jakarta Post's Tubagus Arie Rukmantara
talked to PT Toyota Astra Motor (TAM) president director Johnny
Darmawan about the company's strategy to retain its title of
market leader and about the outlook of the automotive industry
this year. Following is an excerpt of the interview.

Question: What do you think of the Indonesian automotive
market's growth over the last five years?

Answer: Over the past five years GDP has grown 3 percent while
automotive sales have shown a rising trend of 10 percent. This
means the market has grown drastically since 2000.

In 2002, sales were around 300,000 vehicles. A year later,
sales reached 354,000 and surprisingly increased drastically to
483,000 in 2004, far beyond our prediction of 430,000.

How did the growth affect your sales?

Our market share has always been in line with annual total
sales. From 2000 to 2002, TAM's sales growth remained stagnant at
26.5 percent of the total market. But in 2003, we recorded a rise
to 28 percent. Most surprisingly, in 2004, our sales jumped to
29.3 percent.

TAM broke through the 100,000 annual sales figure in 2003 by
selling 101,000 vehicles. The following year, our sales increased
40 percent to 141,000. It was an excellent achievement for our
company, the Indonesian arm of Japanese Toyota Motor Corp.

The record put us in fifth place of Toyota's global sales
after the United States, which recorded sales of 2.2 million,
Thailand (260,000), Australia (200,000) and Canada (171,000).

This tremendous achievement has helped us remain the leading
automaker in the country. Plus, we managed to widen the gap
between us and other carmakers here.

The gap between TAM and the second rank is more than 10
percent. In May, Toyota's domination in commercial vehicles was
38.6 percent, followed by Honda (18 percent) and Suzuki (17.4
percent).

What factors drive the market?

At the micro level, growth is an effect of low interest rates,
consumer purchasing power and the great variety in vehicle loans.
Another factor is the variety of products on the market. More and
more new cars have flooded into the country in the last few
years, giving people more options.

At the macro level, Indonesia's economy is growing, GDP is
increasing, the government is promising for the market as there
has been improvement in law enforcement through the war on
corruption.

All of these factors create an good business climate that
attracts investors in the automotive industry. Having foreign
investors also improves Indonesia's automotive market.

For example, Toyota Motor Corp. appointed Indonesia as its
production based for Innova and Avanza, increasing its investment
by 30 percent.

That's good, but we are expecting even bigger investment.
Perhaps its is waiting to see if an even better investment
climate is created.

However, the government has yet to formulate any policy that
supports the automotive industry.

What factors have contributed to TAM's achievement in
maintaining its place as the market leader?

Our success story is influenced by three factors: high quality
products, a complete lineup of cars and after sales service.

In terms of product lineup, we offer passenger vehicles such
as sedans, MPVs, budget cars and premium cars as well as
commercial vehicles.

Many of our competitors do not have such a complete lineup.
Moreover, our products are offered at competitive prices.

What made Toyota headquarters choose Indonesia as one of its
production bases, considering that our neighbors have better
investment climates?

Investors' main concern is making good products at competitive
prices. In the automotive business, prices can only be made
competitive through increasing the production volume, which can
only be achieved by producing vehicles regionally or worldwide.

Indonesia and Thailand attract Toyota's attention due to their
big populations. Kijang is a promising product for the Indonesian
market while Thailand's is the pickup.

TAM has a booth at the ongoing Gaikindo Auto Expo. What is
your target at the event?

This one of the most prestigious auto expos, like the Jakarta
Motor Show. The timing is also appropriate for the release our
new product, the Fortuner.

We haven't set a transaction target for the expo.

We are emphasizing environmentally friendly technology, which
is also the theme of the expo.

The message that we want to get across is that Toyota applies
environmental friendly energy to its products.

At the expo, we are presenting our special exhibit cars,
namely Toyota Fine-S and a cutaway engine of the Prius, the first
massively produced hybrid car.

The cars are on display to make people understand the working
process of hybrid and hydrogen-based-fuel cars.

The U.S. dollar has strengthened against the rupiah recently
and we are facing a fuel shortage. Will that affect TAM's sales
target this year?

Of course. The exchange rate of the rupiah against the dollar
will effect prices, which I believe will have an impact on the
market.

But Toyota is focusing on dominating 30 percent of the market
here, no matter how many cars we sell by the end of the year.

Our sales target is 163,000 cars this year. With the recent
average monthly sales of between 13,000 and 15,000, we believe we
can meet our target.