Rupiah Weakens, Vehicle Financing Demand Potentially Declines

JAKARTA, KOMPAS.com – The weakening of the rupiah exchange rate is assessed as having the potential to affect the performance of the financing industry, particularly in the motor vehicle financing segment. Authorities state that this impact will primarily be felt through adjustments to vehicle prices that have imported components. The Head of Executive for Supervising Financing Institutions, Venture Capital, and Other Financial Institutions (PVML) of OJK, Agusman, explained that the rupiah’s weakening could impact the demand side for vehicle financing in multifinance companies. According to him, the rise in vehicle prices due to the rupiah’s weakening has the potential to dampen public interest in buying new vehicles, especially those with high imported content. This situation could ultimately affect the disbursement of financing by multifinance companies. In facing this situation, Agusman emphasised the importance of adaptive measures from financing companies. “In responding to this, financing companies need to strengthen risk management, maintain prudent principles in financing disbursement, and adjust business strategies adaptively to maintain a balance between growth and financing quality,” he said. These steps are considered important so that financing companies can still maintain asset quality amid the potential decline in public purchasing power. In addition, business strategy adjustments are also needed so that the industry can still grow without sacrificing prudence aspects. “The rupiah’s weakening can also impact the risk profile of financing companies, especially if it affects debtors’ ability to pay, so it needs to be anticipated, among others, through strengthened monitoring and risk mitigation,” he explained. In line with the increasing risks, multifinance companies are expected to take more selective steps in disbursing financing. This is done to maintain portfolio quality. “In line with that, financing companies will tend to be more selective in disbursing financing to maintain portfolio quality,” said Agusman.