Toyota remains optimistic despite 1996 fall

By Russell Williamson

THE year 1996 may well go down on record as Toyota-Astra Motor's annus horribilus.

While the volatile nature of the whole automotive sector this year has taken its toll on sales -- which are likely to fall short of expectations by more than 50,000 cars and reach only 320,000 for the year -- Indonesia's biggest carmaker has probably taken the hardest fall.

On paper, at least, the statistics paint a fairly bleak picture.

Toyota's market share has dropped to a point where Mitsubishi may take the leadership title from Toyota -- an honor it has held for the past 11 years.

Sales of the Kijang -- a model which makes up 80 percent of Toyota's total volume -- fell by about 24 percent to the end of October compared with the same period last year.

Toyota passenger car sales -- of which Corolla makes up about 65 percent to 70 percent -- fell by 30 percent over the same period against an industry average fall of only between 5 percent and 6 percent.

Overall retail sales for Toyota, combining vehicles of all categories, fell between 15 percent and 17 percent over 1995.

The statistics keep coming and the picture does not get any brighter.

However, while the company may be down, it is by no means out, and intends to fight to regain its position as Indonesia's premier carmaker.

The marketing director for Toyota-Astra, Nobuharu Tabata, said the whole industry was entering a period of transition and all manufacturers would need to work hard to survive and prosper over the next few years as government policy and consumer preferences were molded to meet the needs of the future.

For Toyota, Tabata said this meant putting the year behind it and focussing on the prospects for next year with a renewed vigor.

The cornerstone of this strategy to revitalize Toyota's fortunes lie squarely with the new model Kijang, which will be launched sometime next month.

With a wider model range and the most substantial change to the vehicle since 1987, including the addition of a diesel engined version, Tabata said he expected the company to be able to win back much of its lost sales from this year.

Indeed, he said one of the reasons for the drop in Kijang sales this year were the widespread rumors of the impending arrival of the new model causing customers put their purchase decisions on hold.

Tabata said the floods in Jakarta in February also severely affected sales for about three months because not only did production cease for two weeks, but also many small business customers were hit badly by the floods and delayed or canceled Kijang purchases.

He said a tightening of the finance sector's lending policies and a relatively high interest rate of about 22 percent had also had a detrimental effect on sales.

"There is a high interest rate and finance companies have been controlling their credit since the end of last year and because of that sometimes the marginal customers cannot get a loan from a finance company," Tabata said.

However, while he acknowledged that the announcement of the arrival of a new cheap sedan in the form of the Timor car in February had slowed sales, since the car's actual delivery debut in October and the customers' response to it, he was confident that there was still very much a market for multipurpose family vehicles like the Kijang.

Tabata said that while some commentators in the industry pointed to countries like Thailand and Malaysia as indicators of the increasing preference of consumers for passenger sedans, Indonesia was a very different country with its own particular vehicle needs.

"There will be a slight decrease on reliance on Kijang but there still remains a substantial market for the minibus," Tabata said.

"For example, in the rainy season there are floods and the higher ground clearance of the vehicle type is a benefit because of the bad roads," he said.

He said although the infrastructure was improving, it was not going to change overnight and there would always be a need for vehicles like Kijangs outside of the big cities.

He also said the larger size of Indonesian families -- requiring vehicles to carry more than five passengers -- and the relative ease to maintain the mechanical nature of the Kijang meant the vehicle was likely to remain on consumers shopping lists for some time to come.

Although the new Kijang may provide a degree of optimism for Toyota's prospects for next year, the chances of the company seeing any significant improvement in its passenger-sedan sales before at least 1998 remain slim.

Tabata said what the company needed was a car to compete in the sub-Rp 50 million market to cater for the growing middle income earners in the cities.

"Corolla is more than Rp 70 million, so the average customer cannot afford it but once we can provide customers with such a car at less than Rp 50 million we can expect a substantial increase," Tabata said.

He pointed to the success of the Suzuki Baleno, Bimantara Cakra and Honda City as evidence of this as all these cars had eaten into Corolla sales to some degree.

"Such models have effected Corolla sales and they have dropped to around 400 per month while we were selling between 600 and 700 last year," he said.

However, he said, when Toyota launched the affordable family car (AFC) in 1998, it would be able to regain some market share in this growing market segment.

The AFC is a 1500cc small four-door sedan which has already gone on sale in Thailand and is tailored to meet the needs of the urban class.

He said once that vehicle was available in Indonesia, Toyota could expect to regain its market leadership as it would have a product lineup to cater for all the needs of local consumers.

"One of our strongest points is that we will be able to offer both types of vehicles for the Indonesian market," he said.

And in a market that he still expects to reach 500,000 cars a year by 2000, that should augur well for the survival and indeed, prosperity, of Toyota.