Ardian Wibisono

Car Sales Fall in 2009, but Not as Badly as Expected

Domestic car sales fell by 20 percent in 2009, according to industry data released on Monday, but the decline was only half as bad as industry forecasts.

Figures from the Association of Indonesian Automotive Manufacturers (Gaikindo) showed 486,061 units were sold last year, compared with 607,805 units in 2008. However, earlier in 2009 Gaikindo forecast that sales would plummet 40 percent.

This year, with GDP forecast to grow by 5.5 percent and interest rates expected to stay low, Gaikindo is predicting sales growth of at least 15 percent.

“We saw earlier that sales might be hampered by the crisis, but it turns out they weren’t. Demand began picking up in April,” said Johny Darmawan, the chief executive of PT Toyota Astra Motor and a Gaikindo official.

If there was no increase in vehicle tax, the 15 percent target was realistic, he said. “This year, we are not going to increase prices unless the tax is increased. The strengthening rupiah compensates for the price of raw materials,” Johny said.

PT Bank Central Asia economist David Sumual said that, based on Bank Indonesia’s buying intentions survey, he expected car sales would be much stronger this year than in 2009.

The survey showed consumers’ plans to buy durable goods, including cars had increased to 81.1 on its index in December, from 64.8 in January 2009.

The willingness of lenders to provide credit for car purchases was also important as around 70 percent of new cars are bought with loans, David said.

“Interest rates have fallen to their lowest levels, risks have decreased and this will increase lenders’ appetite to lend more.”

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