Rupiah Weakens, Daimler Signals Spare Parts Price Hike

JAKARTA — Fluctuations in the rupiah’s exchange rate weakening against the US dollar and euro in recent times have started to pressure the national automotive industry. This macroeconomic condition is acknowledged to also impact the commercial vehicle business sector. PT Daimler Commercial Vehicles Indonesia (DCVI) has signaled that currency depreciation naturally could lead to price adjustments in the after-sales sector, particularly for components or spare parts. DCVI President Director Naeem Hassim said that foreign currency exchange rate movements are daily challenges faced by automotive manufacturers worldwide. “This is natural. It is expected that if the rupiah depreciates against the dollar or euro, it will make it difficult for companies to maintain their margins. This will inevitably lead to price increases,” Naeem said during an interview in Jakarta recently. Manufacturers or dealers still holding old stock purchased before the rupiah weakened are likely to keep prices stable. “Each corporation must review their own situation and decide what to do. Whether to raise prices or not? Some parties, if they see the market is still poor and they have existing stock available, may not increase prices,” Naeem said. Conversely, price adjustment pressure is unavoidable for dealers whose component stock has run out. They are forced to procure or import new parts from abroad using current exchange rates. “Considering the geopolitical situation, this is challenging for Indonesia as it is located in the south, and routes to Europe are hindered by the situation in the Middle East. So this is indeed a challenge,” Naeem explained. Amid this challenging macroeconomic environment, Daimler hopes the government can continue to formulate new incentive programmes to maintain a conducive foreign investment climate in Indonesia. Naeem believes strong government commitment will help investors navigate exchange rate fluctuations.