Sales of Timor national car plunged in February

Sales of Timor national car plunged in February

By Clay Lucas

SALES of the Timor Putra national car collapsed last month.

The company had expected to sell more than 3,000 cars in
February but, according to statistics released by PT Astra
International, sold only 962.

This was down from 3,259 in January.

There was a 22 percent drop in total vehicle sales for the
month, down to 24,281 from January's encouraging 31,522.

But February included the Moslem fasting month of Ramadhan,
when most companies experienced a severe downturn in business.

Despite the plunge, the Timor car continues to fare better
than its rivals in passenger cars, leading Honda, which sold 873.

The Timor car alone benefits from duty and tax breaks granted
by the government under the national car policy.

The company said last week it had promoted the cars throughout
the country with incentives such as a 24-month spare parts and
service guarantee. It expects the sales drop to be a temporary
lapse.

PT Timor executives said the company continued to control more
than 25 percent of the market since the launch of the Kia-built
car in October last year.

Timor sedans will be manufactured by PT Timor Putra Nasional
in conjunction with South Korea's Kia Motors Corp.

The company is controlled by President Soeharto's youngest
son, Hutomo Mandala Putra. It imports completely built up Kia
Sephia sedans because it does not yet have a manufacturing plant
of its own.

The government has allowed PT Timor to import about 45,000
sedans a year from Kia Motors. The company has so far imported
about 18,000.

This discriminatory treatment has angered Japan, the European
Union and the United States, all of whom have filed complaints
with the World Trade Organization (WTO).

These countries are negotiating with Indonesia and the issue
is expected to come to a head at the next WTO meeting, scheduled
for later this year.

PT Timor originally planned to assemble Timor cars in
Indonesia but due to "inadequate assembly facilities" has been
given a temporary exemption to allow importation from South
Korea.

PT Timor Distributor Nasional president Soemitro Soerachmad
said last week the company was well advanced with work on a plant
in Cikampek, Bekasi, West Java, to manufacture all Timor cars.

"We want to put out at least 4,000 sedans every month from
that plant," he said.

"We are committed to developing an internationally competitive
automotive industry here, with the mass manufacturing facilities
available in many other Southeast Asian countries."

The plant, built on 73 hectares and totaling 200,000 square
metres of production floor space, will ultimately have an annual
production capacity of 120,000 vehicles -- 70,000 sedans and
50,000 Sportage sports utilities.

Construction of the plant started on February 24 and is
expected to be completed by September next year.

It was announced last month that the company had signed an
agreement with Indomobil, the country's second largest car group,
to assemble Timor sedans at its plant in Tambun, near Bekasi.

The collapse of Timor car sales in February showed it still
has work to do in developing its marketing and distribution
system, Soemitro said.

The company launched a special package in January which failed
to attract purchasers.

Spare parts for the vehicle remained hard to find and this may
have deterred many people from buying.

PT Timor claimed earlier this year that competitors had waged
a "trade war" against it and had spread rumors it had a poor
after-sales service.

Consumer confidence in the vehicle dipped last month when
House member Ni Gusti Ayu Eka Sukmadewi reported Kia Motors had
been dumping defective vehicles onto the Indonesian market.

State-owned PT Surveyor Indonesia carried out an exhaustive
investigation into the claims and established that all vehicles
being shipped in by Kia Motors were in showroom condition.

Kia Motors pitched in against Ni Gusti's statements. "The
allegation of dumping defective vehicles is outrageous and
groundless, as Korea uses left-hand drive cars while Indonesia
uses right-hand drive cars," it said.