Toyota Astra says Kijang van price will not increase
JAKARTA (JP): Carmaker PT Toyota Astra Motor said on Wednesday it would maintain the prices of its popular brand Kijang multi- purpose van, despite the abolishment of tax breaks to cars with high local content.
The company's technical director Adirizal Nizar said the price of Astra's Kijang van, which has 49 percent local content, would be maintained in order to secure its market share here.
"We realize that Kijangs are the most popular vehicle here. Competition is very tight now. If we increase the prices, sales may decline," he said on the sidelines of an automotive workshop.
Adirizal acknowledged the removal of the tax incentives should make Kijang vans more expensive.
He said according to the company's latest study, Kijang's production costs would increase by between Rp 800,000 (US$114.3) and Rp 1 million per unit, due to the removal of the tax breaks.
The company earlier predicted that lifting of the incentives would increase Kijang prices by Rp 4.5 million per unit.
New Kijang models have an average price of Rp 110 million (about $15,715), he said.
Astra was previously exempted from import tariffs for Kijang components.
Under the former automotive regulation, as a locally assembled vehicle with a 49 percent local content, Kijangs were eligible for import duties of zero percent and a luxury tax of 20 percent.
Under the new automotive policy announced last month, the government restructured import tariffs and luxury taxes on automobiles and removed incentives for vehicles with high local content.
Under the new policy, a Kijang, which is categorized as a completely-knocked-down (CKD) vehicle, or a locally assembled commercial vehicle, was subject to a 25 percent import duty, and a luxury tax of between 10 percent and 15 percent, despite its high amount of locally produced components.
Pickups cheaper
Adirizal said Astra had lowered the prices of its locally- assembled pickups following the imposition of a zero luxury tax.
But the costs of other Toyota vehicles, such as Corolla sedans and Land Cruisers were increased, due to higher import duties and luxury taxes imposed on the vehicles, he said.
The import duty on locally-assembled vehicles has been set at 25 percent, while a luxury tax for pickups is set at zero percent. Luxury taxes on sedans range between 30 percent and 50 percent, depending on engine capacity, compared to 35 percent previously.
Chairman of PT Krama Yudha Tiga Berlian (KTB) Herman Z. Latif said his company -- the sole agent of Mitsubishi vehicles - would also temporarily maintain prices of its cars.
"We haven't decide on any change in the prices of our cars. The purchasing ability of most Indonesians remains low. To increase our sales, we decided not to increase the prices," he said.
KTB's General Manager for Marketing Buche Kesuma said KTB targeted its newly-launched Kuda van for a 30 percent market share in its category.
"Kuda sales have been very good since it was launched in March. In the June-July period we received orders for 914 Kuda diesel units. We have also sold 800 units of Kuda gasoline, even though it was only launched last month," he said.
The company had set a target of selling 6,000 units of Kuda vehicles by the end of this year.
The Kuda car has 40 percent local content and 60 percent imported content.
Off-road prices of Kuda Diesel are Rp 113.5 million for the Super Exceed model, Rp 105 million for the GLS model and Rp 103 million for the GLX model.
Director General of Metal, Machineries, Electronics and Various Industries Agus Tjahajana said the fact that the new automotive policy could not reduce car prices indicated that the domestic market was "not healthy".
He said the government earlier expected that the policy would lower showroom prices of small sedans by 9.8 percent. At present, such a drop is unrealistic because other small sedans could not compete with the much lower prices of Timor sedans.
Car analyst Suhari Sargo said the removal of the incentives would increase the prices of locally assembled commercial vehicles with engine capacities above 1,500 cc by at least 5 percent. Vehicles in this category include Toyota Kijang, Daihatsu Espass, Isuzu Panther and Mitsubishi Kuda.
Sales of such vehicles accounted for more than 80 percent of the total domestic sales.
Suhari said domestic car sales would remain sluggish this year, with sales projected at between 50,000 units to 60,000 units.
"Car sales in the domestic market is likely to hit 100,000 units next year, with the condition that the country's economy continues to improve," he said. (gis)