Political woes force down car sales

Political woes force down car sales

JAKARTA (JP): The Association of Indonesian Automotive
Industries (Gaikindo) said on Friday that domestic sales of new
cars slightly dropped in June due to rising political
uncertainty, and estimated that local sales would remain low
until September.

Gaikindo chairman Bambang Trisulo said fears that the upcoming
General Session of the People's Consultative Assembly in August
would heat up the political tension caused people to delay their
purchase of a new car.

"Political uncertainty is disturbing the market," Bambang told
The Jakarta Post.

Data from Gaikindo recorded a slight drop in domestic car
sales in June to 27,480 cars from 27,502 the previous month.

Bambang warned that car sales might further drop in July and
August and would recover only if the Assembly's General Session
runs smoothly.

Domestic car sales this year have so far enjoyed robust growth
with sales in January starting from 11,032 cars, which was partly
because of growing consumer confidence.

Sales of passenger cars in June dropped to 4,256 cars from
4,614 in May, whereas commercial car sales increased to 23,224
cars from 22,878 the month before.

During the same period, domestic sales of motorcycles declined
to 65,977 from 71,537.

Gaikindo, however, reported that car exports in June increased
to 5,030 from 4,791 cars in May.

Bambang said the weaker rupiah had contributed to higher
export sales as "economies outside Indonesia were recovering".

He said car prices on the domestic front were relatively
stable within the last two months despite a fall in the rupiah to
the U.S. dollar.

Bambang added that there would be a price increase if the
rupiah continued to stay at the current level of between Rp 9,000
and Rp 9,500 to the U.S. dollar.

"We hope the rupiah will recover once political conditions
improve after the General Session," Bambang said.

Bambang said he was optimistic that domestic car sales would
reach a target of about 260,000 cars this year despite the lower
than expected sales in June.

"I don't think there'll be a revision of the target, but if
so, it will only be a minor correction," he said.

He said during the first semester of this year domestic car
sales reached 126,000 cars, and would likely more than double in
the next semester.

"Car sales in the second semester are always better than
during the first," he explained.

Gaikindo's report did not include sales of completely built-up
(CBU) cars imported by general car importers.

Imports of CBU cars became attractive after the government cut
import duties in June 1999 to between 65 percent and 80 percent,
depending on the engine capacity, from 200 percent previously.

According to data from the Customs and Excise Office, imports
of CBU cars reached 5,101 cars during the period of July 1999 to
April 2000.

Bambang expects sales of CBU cars will likely drop in line
with declining markets of these expensive cars and the
government's plan to hike import duty to 110 percent.(bkm)