Premium car sales expected to drop 20 percent in 2006

The Jakarta Post Jakarta

Already suffering from declining sales, the premium car market is expected to continue its struggle in 2006 under the impact of higher interest rates and a luxury tax increase.

PT DaimlerChrysler Indonesia president Friedel Engisch said on Monday the premium car segment -- dominated by his company's flagship Mercedes-Benz, as well as BMW, Jaguar, Audi and Volvo -- would likely see a 20 percent decline in passenger vehicle sales.

"Premium car sales this year have declined to 3,232 units as of November. The figure is much lower than last year's 4,667 units and 4,442 in 2003," he said during a launch for the company's new S-Class vehicle.

"For next year, I think there will be a 20 percent reduction in the premium car segment."

Bank Indonesia, the central bank, raised on Dec. 6 its key interest rate by another 50 basis points (bps) to 12.75 percent in an attempt to strike a balance between containing inflation and maintaining economic growth.

Meanwhile, the government will soon raise the luxury tax on automobiles following the issuance of a presidential decree signed on Oct. 25.

DaimlerChrysler has lowered its sales target next year to 1,800 units from 2,000 this year.

"As of November this year, our sales stood at 1,749 units. But we believe that we can reach our sales target of 2,000," Engisch said, adding that the Mercedes-Benz's C-Class and E-Class accounted for some 90 percent of sales.

According to data from the Association of Indonesian Automotive Manufacturers, Mercedes-Benz leads the premium market segment with 1,749 units sold in the first 11 months of the year, followed by BMW (1,164), Volvo (149), Audi (111) and Jaguar (59).

This figure is a record for Mercedes-Benz, which for the first time has at least a 54 percent share of the market.

In a bid to boost its sales next year, DaimlerChrysler will launch the new C-Class, R-Class, G-Class and B-Class.