Tight money policy worries car producer

Tight money policy worries car producer

The Jakarta Post, Jakarta

The Indonesian arm of Japan-based Mitsubishi Motor Corp. (MMC),
PT Krama Yudha Tiga Berlian (KTB), has expressed concern that
Bank Indonesia's tight money policy will lower car sales in the
remainder of this year.

KTB director Rizwan Alamsjah said on Tuesday that Indonesian
auto manufacturers might face a decline in car sales in the next
three months if the central bank maintained its policy, which
included the increase in its benchmark interest rates of up to 10
percent per annum, for a long period.

He said BI's policy would affect the number of automotive
loans given by banks and financing companies.

"Declines in loan expansion will significantly affect our car
sales, of which 70 percent are financed with loans," he said at
KTB's plant in Pulogadung, East Jakarta.

However, he added, KTB would not revise its sales target this
year before the Association of Indonesian Automotive
Manufacturers (Gaikindo) released its latest projection of this
year's car sales.

"We will continue to work hard so that our target sales of
100,000 units can be achieved," he said.

Gaikindo had projected that car sales might reach 550,000
units, higher than last year's 483,000 units. However, the
government's March 1 fuel price hike and its proposal to raise
luxury tax on cars with an engine displacement of between 1,500
cubic centimeters (cc) and 3,000 cc by up to 10 percent has made
it cut its estimate by between 15,000 and 20,000 units.

"The country's total car sales had already reached about
400,000 units during the first eight months of the year," he
said. "If Gaikindo's projection for 2005 can be achieved, we
expect our target can also be achieved."

He said Mitsubishi's car sales in the January-to-August period
reached 75 percent of the 2005 sales target.

According to KTB data, 68,903 Mitsubishi cars were sold from
January to August, or the equivalent of 17.4 percent of the
country's automotive market.

Rizwan said the data showed that MMC's decision to move
passenger car manufacturing to Thailand earlier this year had not
affected Mitsubishi's sales.

"Our principal has decided to move passenger car manufacturing
to Thailand as part of its strategy to improve efficiency and let
us focus only on producing commercial vehicles, but people can
still purchase our sedans," he said.

The president director of Mitsubishi assembling plant PT Krama
Yudha Ratu Motor (KRM), Manahara Parhusip, said this year, his
plant had a production target of 10,000 units per month in order
to fulfill the domestic demand in commercial vehicles.

"Hopefully, we can produce no less than 111,500 vehicles this
year; a 20 percent increase from last year," he said.

KRM data showed that a total of 81,588 vehicles, mostly trucks
and pick-up trucks, were produced last year. (006)