Short-term survival the priority for local carmakers

By John Aglionby

GOVERNMENT ministers struggling with limited job security, International Monetary Fund economists stuck between the beads on their abacus and numerous visiting dignitaries have spent all week talking up Indonesia's long-term economic prospects.

Unfortunately, the short-term has to be overcome first and in this department, the doom and gloom merchants definitely have the upper hand.

Particularly in the automotive industry, where vehicle sales are expected to plummet from last year's record of almost 400,000 to little over half that.

"We are not thinking about anything other than survival at the moment," said Jongkie Sugiarto the president director of PT Bimantara Cakra Nusa.

"Of course we are still thinking about new products but we have no idea when we might be able to introduce them."

Friedel Engisch, the marketing director of PT Star Motors Indonesia, the sole distributor of Mercedes in Indonesia, said his company was looking to bring in the company's new recreational vehicle, the M Class "as soon as possible".

"However I'd be lying if I said it will definitely be here by the end of the year," he added. And that's still 50 weeks away. Mercedes has stopped all production at its Gunung Putri assembly lines until Feb. 9, to give the markets a chance to stabilize.

Nissan is facing problems of an equally unsettling nature. A company spokeswoman said: "The situation at the moment is still very unstable.

We are not even confident enough to continue production at the moment because of the situation," referring to the company's sport utility vehicle the Terrano.

And one of its cars that is still available, the Infiniti, powered by a 3.0-liter, 24-valve, DOHC V6 engine, has increased in price by more than 36 percent since its launch in the middle of last year.

At least the above companies are still talking about what they are intending to do, or not as the case may be. PT Astra is not willing to do that. Marketing Director Nabuharu Tabata is not prepared to discuss Toyota's prospects in Indonesia in the months to come at all.

Herman Latief, the chairman of the Association of Automotive Industry Manufacturers, summed up most industry executives' feelings when he said: "The economic and political uncertainty is such at the moment that we want to see how we come out of the first three months of the year.

"By then, we'll be able to see the sales trend and make adjustments to current predictions. It would be premature to make any long-term predictions now."

One piece of slightly less miserable news, according to Herman, is that December's sales -- of around 18,000 vehicles nationwide -- were not as bad as he feared they might have been.

"There's no major single reason for this but part of it could be that because the dollar is changing so much and people can't buy dollars any more, they are buying cars."

He accepted, however, that sales this month would probably be down on December.

"People are waiting to see what the effects of the IMF negotiations will be and also few people buy cars during the fasting month. They usually wait until afterward to do so."

So, not only is new product likely to be rare in the immediate future, production of many older products will also be limited. The only benefit of all this, it seems, is that the rate of increase of congestion on the country's roads will hopefully level out or even decline a bit.