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)