Fri, 11 Jul 2003

Toyota and Honda continue to dominate passenger car market

Hendarsyah Tarmizi The Jakarta Post Jakarta

Japanese car makers Toyota, Honda and Suzuki continue to dominate the local passenger car market despite growing competition from several new rivals particularly those from neighboring South Korea.

According to the latest report issued by the Association of Indonesian Car Manufacturers (Gaikindo), Toyota remains the most popular car in the country, with total sales of 4,985 cars during the January to May period this year.

Honda, Toyota's main competitor in the sedan market, was ranked second with total sales of 2,292 cars during the same period, while Suzuki, known for its popular Baleno sedan and Carry van, was third with total sales of 1,477 cars.

Korea's Hyundai, a relatively new player in the Indonesian car market, trailed closely behind the big three from Japan thanks to its success in entering the city car and sedan market. Hyundai, which entered Indonesia in the early 1990s, booked total sales of 1,552 cars during the first five months of 2003.

Mercedes Benz, the market leader in the luxury car market, was in the fourth slot, with total sales of 950 cars, while BMW was fifth with total sales of 721 cars. Japan's Mitsubishi, which is gaining popularity due to its success in the sales of its Kuda van, was in sixth with total sales of 312.

The remarkable success of the three Japanese car makers has been largely due to their leading roles in the market of small and medium sedans and minibuses.

Cars in this market segment comprise the city car, sedans with an engine capacity of between 1,300 cc and 1,800 cc and multi- purpose vans, which are sold at a price range of between Rp 100 million to Rp 250 million.

PT Toyota Astra Motor, the sole distributor of Toyota cars in Indonesia said that total sales reached 8,397 units including commercial cars during the first five months of this year, an increase of 9.7 percent from the same period last year.

Toyota said that Soluna and the newly launched Vios sedan controlled 30.6 percent of the small sedan car market, while Toyota Camry controlled 30.6 percent of the medium sedan market.

Meanwhile, the so called people's car, the Kijang van, with total sales of 5,337 units during the same period, had a 60 percent share in the minibus market. Kijang has, for years, led this market despite the tight competition from several other names such Mitsubishi Kuda, Suzuki Carry, Daihatsu Espass and Isuzu Panther.

In the luxury car market, Mercedes-Benz also continued to maintained its dominance, controlling about 50 percent of the market share.

DaimlerChrysler, the distributor of Mercedes cars in Indonesia, said that the demand for expensive cars was quite encouraging during the first semester of this year in line with signs of improvement in the country's economy.

National car sales - both passenger and commercial cars rose by 6.6 percent to 140,486 cars from January to May from the same period last year. About 30 percent of the total sales came from Toyota.

The total car sales were about 40 percent of the local car distributors' target of 340,000 cars for this year.

Distributors believe that this year's sales target could be achieved if the economic condition continued to improve in the remaining months of this year.

They even believe that this year could become the turning point of the domestic car market which has been severely hurt due to the financial crisis several years ago.

The crisis which started in late 1997 and peaked in 1998 had almost closed down many local car producers which mostly produce vehicles under joint ventures with their foreign partners. Imports of completely built-up (CBU) cars were totally halted due to crisis which had led to the collapse of the value of the rupiah against the U.S. dollar by 70 percent.

The weak rupiah not only resulted in a high interest rate, a hyper-inflation but also the increase in car prices by almost 300 percent. As a result, national car sales which reached 390,000 cars in 1997 plunged to a mere 58,000 cars and 93,000 in 1998 and 1999, respectively.

The car market showed signs of recovery in the following years amid improvement of the economy, with sales rising to 301,000 cars in 2001 and to 317,000 in 2002.

The country's economy has indicated further signs of improvement in the past several months as indicated by the low inflation rate, the fall in interest rates and the strengthening of the rupiah against the U.S. dollar.

This promising economic outlook has encouraged many car distributors to launch their new models. Astra Finance Motor, the sole distributor of French car Peugeot, will, for example, launch the Peugeot 807 series this month to take advantage of the growing multi purpose van (MPV) market.

Like its sister Peugeot 206, the new 807 series has also attracted a positive response from car lovers. "We have already received orders for at least 100 units of the new 807 series although it will only be launched during the Gaikindo Auto Expo, later this month," said AFM's Planning and Communication Head, Mukiat Sutikno.

Like other car executives, Mukiat is quite optimistic that the upward trend in car sales will continue over the next six months.

PT Car and Cars Indonesia, the sole distributor of VW cars, also expects that the car sales will continue to increase although the growth in sales during the past several months was not so remarkable.

"We are quite sure, our sales will reach the target this year," said the company's president Wenda Wonoseputro.

According to Wenda, the newly launched VW Polo series should dominate VW car sales in Indonesia thanks to its growing popularity among the country's car lovers. "This new series has been well accepted in the market. Besides its affordable price, the car also promises the luxury that can be only enjoyed in expensive sedans," she said.