Producers of luxury cars stick to local market despite slump
Producers of luxury cars stick to local market despite slump
JAKARTA (JP): Producers of foreign luxury cars in Indonesia
are promising to stay and increase their investment in the
country despite the domestic automotive market's gloomy prospects
for the next few years.
Makers of upper-market automobiles say they are willing to
inject fresh capital to bolster their ailing operations here, or
even purchase the entire stake in the local company so they can
maintain their Indonesian presence.
"We understand that the whole market is in dire straits, we
must do what we can to help our partner here," Vice President of
Volvo Cars Asia Pacific Jack Dirckx told The Jakarta Post last
week.
Dirckx, who oversees the Indonesian office, said he expected
car companies to inject fresh capital or increase their stakes in
their local joint venture companies here in the future in order
to maintain their operations.
"I'm sure there will be a change in ownership structures in
the car business here, and Volvo is part of this," he said.
"Partners may have to take the majority stake in local
partners or companies to help them survive. But in several years,
this may change again, local companies should be able to increase
their stake again by then," he said.
Volvo is currently uncertain over its partnership with the
Salim Group's Indomobil, the sole authorized assembler and
distributor of Volvo cars in the country because there has not
been a final decision on the future of the partnership.
Dirkx presumed Indomobil had been taken over by the Indonesian
Banking Restructuring Agency (IBRA) since Salim's Bank Central
Asia could not repay central bank's liquidity credits of about Rp
35 trillion (US$4 billion) by the Sept. 21 deadline.
Dirckx said Volvo Car Corporation might inject capital to
bolster its Indonesian operations.
"The current situation is not a market you can live for, but
we have a number of customers in the country, so at the least we
would have to stay here to serve them," he said.
Volvo stopped production in Indonesia in August and is
unlikely to assemble any more cars in the country for the rest of
the year, Dirckx said.
But although sales are estimated to drop to 116 cars this year
from 736 cars last year, Volvo's market share in its competitive
passenger car segment rose to 10 percent this year from 8 percent
in 1997, he added.
Mercedez
German car producer Mercedes-Benz might increase its stake in
the Mercedes-Benz Group in Indonesia because its local partner,
PT Lima Satria Nirwana owned by the H.M. Joesoef family, is
unlikely to be able to raise its investment in the joint venture.
The president of the Mercedes-Benz Group in Indonesia, Frank
Messer, said his parent company in Germany had agreed to inject
capital into the three companies under the group -- PT German
Motor Manufacturing, PT Star Motors Indonesia, and PT Star
Engines, Indonesia.
Mercedes assembles and sells both sedans and trucks in
Indonesia through the three companies.
"We'll have a capital increase of about US$10 million this
year, and about $20 million to $30 million early next year, and I
have a feeling that our partner won't do the same, so
automatically their percentage will be reduced," he told the
Post.
He said the German principal company was prepared to buy from
Lima Satria if the latter had no choice but to sell part of its
stake.
Mercedes Benz currently owns 49 percent in Star Motors, 40
percent in Star Engines and 33.3 percent in German Motors, while
Lima Satria owns the remaining stakes in the three companies.
General Motor's Opel also reconfirmed its commitment to the
country, especially now that it owned the whole of PT General
Motor Buana Indonesia (GMBI).
"We expect to continue raising our share in the sport utility
car segment," GMBI's public relations manager, Helena Abidin,
said.
Helena boasted that Opel had increased its market share to 45
percent in the competitive segment as of August from 35 percent
last year.
She said the incentive package of three years or 5,000 liters
of free gasoline and free servicing and spare parts for every
Blazer purchased had managed to push sales to 100 units in the
June to August period, while the competitors mostly sold fewer
than 20 units a month.
"Overall, our sales dropped 63 percent from January to August
year-on-year, which isn't as bad as the 80 percent slump of the
domestic car market (as a whole)," she told the Post.
Opel currently produces about eight cars a day to suit orders,
she said. Its workforce had shrunk 26 percent since May to 424
people, she said.
In November 1997, General Motors bought the 40 percent stake
in GMBI owned by Garmak Motor of the Mercu Buana Group so that it
owned the whole company. (das)