Small cars to enjoy fastest growth next year: Experts

A'an Suryana, The Jakarta Post, Jakarta

Automotive industry experts predict that small cars will enjoy the fastest sales growth next year in an otherwise slow market.

They argue that small cars, or what are now popularly called city cars, were more affordable for middle-income Indonesian people whose purchasing power had been weakened by the current economic difficulties.

"The fastest (sales) growth will be enjoyed by city cars. Urban dwellers are now becoming increasingly fond of small and compact cars," industry analyst Suhari Sargo explained.

He said that sales of city cars would grow by 10 percent next year.

But he said that sales volume would still be dominated by multi-purpose vehicles (MPVs) such as the popular Toyota Kijang van.

He predicted that total sales volume next year would remain the same as this year's estimate of around 300,000 units.

He said that the flat growth was attributable to the prevailing economic crisis at home.

The government has projected the economy to grow by 4 percent next year, more or less the same as this year's growth estimate.

"Automotive demand depends on economic growth. If economic growth is stagnant, automotive demand will be stagnant as well," he said, adding that the same thing had occurred in 2001.

Suhari predicted that MPVs would take 70 percent of next year's car market, while city cars and medium-sized cars would account for more than 13 percent.

Separately, Gunadi Sindhuwinata, president of automaker PT Indomobil Sukses International, shared Suhari's opinion.

Gunadi, whose company is the second largest carmaker in the country, said that cars with a price tag of below Rp 150 million would continue to be his firm's best performers.

"Indeed, the purchasing power of the public is still weak due to slow economic growth since the economic crisis," said Gunadi.

He predicted that his firm would sell some 65,000 cars next year, about the same as this year's sales.

Meanwhile, the Indonesian Automotive Industry Association (Gaikindo) said that new vehicle sales dropped 8.3 percent to 28,394 units in November.

During the first 11 months of the year, Indonesians bought 299,839 new vehicles, the association said. That represented a 9.3 percent rise from the 274,231 units sold during the first 11 months of last year.