Toyota Astra says Kijang van price will not increase

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)