Tunas Finance targets profit increase of 70 percent in 2005
The Jakarta Post, Jakarta
Betting on continued robust demand, PT Tunas Financindo Sarana (Tunas Finance), an automotive financing company under PT Tunas Ridean, is targeting an increase in net profit of almost 70 percent for this year.
The company projects that this year's net profit will reach about Rp 100 billion through the financing Rp 1.8 trillion worth of new vehicle purchases this year, from Rp 59 billion in 2004, president Halim Gunadi said on Thursday.
"We hope to increase our profit by putting forward our quick and friendly service," said Halim.
Last year, the company financed Rp 1.235 trillion in new cars and motorcycles purchases.
To help reach the target, Halim went on, the company was planning to open five more branch offices, located in Palembang (South Sumatra), Pekanbaru (Riau), Purwokerto (Central Java), Jakarta and Banjarmasin (South Kalimantan).
Currently, the company is operating with 21 branch offices nationwide.
The automotive financing company, operating since 1992, receives its largest portion it's profit from financing car purchases, while "motorcycle purchases contribute only 10 percent" said Halim.
"Most of our car portfolios are for Toyota brands.
"We still see very good prospects in the vehicle financing business for 10 more years as the demand for vehicles, especially cars, will still be high," he added.
The Association of Indonesian Automotive Manufacturers (Gaikindo) expected car sales in 2005 to increase by 10 percent. Last year's sales of 480,000 units exceeded the initial target of 440,000.
Tunas Finance is among many automotive financing companies in Indonesia that have been taking advantage of the surge in demand for vehicles in the past years.
"Our most active competitor is ACC (PT Astra Sedaya Finance)," Halim said, naming the automotive financing company under the automotive giant PT Astra International.
Other major companies in the business are PT Wahana Ottomitra Multiartha (WOM) under the publicly listed Bank International Indonesia (BII) and Adira Finance under Bank Danamon.
Competition also comes from banks that have their own automotive financing products but "finance companies are usually better in the network and can process loan applications faster."
In the past five years Tunas Rental has served several companies, such as Bank Permata, Bank Mandiri, PT Telkom and British American Tobacco.
Tunas Rental signed a contract with BII on Thursday to replace and manage the bank's 632 operational vehicles for the next three years.
Tunas Finance is owned by PT Tunas Ridean Tbk, a publicly listed independent automotive dealership, which has a 75 percent share, and PT Tunas Mobilindo Parama, with a 25 percent share.
Aside from car and motorcycle financing, Tunas Finance developed a vehicle rental and fleet management service division called Tunas Rental in 1999. (003)