Timor president upbeat about firm's sales target

Timor president upbeat about firm's sales target

JAKARTA (JP): PT Timor Distributor National's president
Soemitro Soerachmad defended yesterday the company's hefty sales
target of 70,000 Timors a year.

He said the target was "realistic" because it would be met by
the sale of Timor's S-515 sedan series, its J-520 jeeps, and its
S-210 "Compact Car" which would cost Rp 20 million (US$8,195).

"Kijang sells up to 70,000 vans a year, and they offer only
one model. So it shouldn't be so hard for us to sell 70,000
vehicles a year as well," he said.

Soemitro said he was confident that the 13 bank consortium
which was set up to finance the construction of PT Timor Putra
Nasional's manufacturing facility in Krawang, West Java, would
soon disburse its loans.

The government in May ordered the banks, led by state-owned
Bank Dagang Negara, to lend $1.3 billion to the project.

Most of the consortium members have responded cautiously to
the issue, saying they need more time to consider the proposal.
None of them have started disbursing the loans.

Timor Putra -- controlled by President Soeharto's youngest son
Hutomo Mandala Putra -- is the country's sole "national car"
manufacturer. It is cooperating with South Korea's Kia Motors
Corp to produce the national car.

It imports Timor sedans fully assembled from South Korea
because its production facilities are still being built.

The national car receives import duty and luxury tax
exemptions, making it 60 percent cheaper than other cars in
Indonesia. The car must have a 20 percent local content by the
end of the first year of production -- which falls in October --
40 percent by the second and 60 percent by the third.

Shortly after the consortium was set up, Coordinating Minister
for Economy and Finance Saleh Afiff said the government would
slash the requested loan amount because of Timor's questionable
sales target.

Afiff said Timor's projected sale of 200,000 sedans by 1999
was an overestimation because the country's best-selling vehicle
-- Toyota's Kijang van -- sold just 70,000 cars a year.

Negotiation

PT Timor Putra Nasional's president, Hutomo said negotiations
between Timor Putra and the consortium had yet to be concluded.

"In principle, our proposal has been approved, but talks have
not been finalized yet," he said yesterday.

Hutomo said the issue would be finalized by the 28th of this
month.

"We still need to know how many banks will remain in the
consortium, how much each of them will contribute (to the
project), how much Timor Putra needs to contribute and how much
more it needs from the initial public offering (IPO) next year,"
he said.

He said Timor Putra now put its sales target at 120,000 cars
by 1999, down from 200,000 cars it had initially proposed.

Hutomo had said earlier this year his company needed US$1.3
billion to develop its manufacturing plant. But he said the
company needed only $690 million from domestic banks as $610
million would come from its own equity, operational profits and a
planned initial public offering next year.

Soemitro said yesterday the sedan sales share of the
automotive market over the last 10 months stood at 13 percent.
Total automotive sales are growing at 15 percent to 20 percent a
year.

"We are confident that the market share of sedans will reach
17.5 percent by the end of this year because of the many choices
of cheap sedans, including Timor, Nenggala and Cakra," he said.

Nenggala and Cakra are manufactured by the Bimantara group in
cooperation with Hyundai Motor of South Korea. Bimantara is
controlled by another of President Soeharto's sons, Bambang
Trihatmodjo.

Soemitro said the sedan market next year would exceed 400,000
vehicles. Timor intended to seize up to 20 percent of this, he
said.

In 1999, the sedan market would reach about 550,000 cars, he
added.

"Timor intends to produce 120,000 S-515 sedans, J-520 jeeps
and S-210 Compact Cars that year," he said. The Timor jeep and
Compact Car are not yet on the market but are due to be released
later this year.

Figures released by Timor Distributor yesterday showed that
Timor sales last month reached 1,623, up from 1,301 in May and
1,621 in April. In March it recorded sales of 1,259 vehicles
after a sharp drop in February when it only sold 962 cars.

Soemitro said the company would continue to aim to sell 2,000
cars a month.

Timor sales were only rivaled by Suzuki Baleno sales which
reached 1,077 vehicles last month and 1,084 vehicles in May.(pwn)