Automakers Up 2012 Target to 1m
The Association of Indonesian Automotive Manufacturers is back in bullish mode on its prediction about car sales this year.
The association known as Gaikindo is now projecting sales nationwide of one million vehicles in 2012, up from its previous estimate of 875,000 vehicles.
Gaikindo said the outlook jumped after it took time to observe and realize that the impact of a new regulation on higher down payments, issued by the central bank and the Finance Ministry, was not as bad as initially predicted.
“We have revised the target, because car sales in August were better than expected,” said Sudirman Maman Rusdi, chairman of the association.
The rule, introduced in mid-June, requires car buyers to make a minimum down payment of 25 percent of the sale price for loans from financing companies, and 30 percent if the loan is from a bank.
Previously, there were no rules and sellers often only required about 15 percent. The regulation was introduced to prevent soaring non-performing loans for vehicle purchases. Around 70 percent of car purchases in Indonesia are financed by loans.
Sudirman said Gaikindo was expecting car sales in August to reach 50,000, but the actual figure was 76,980 units. This brought the total for the first eight months of the year to 714,758 vehicles, up 23 percent from the same period a year ago.
Sudirman, who is also a director at Astra International, the biggest automotive distributor in the country, said Indonesian consumers must buy around 75,000 units per month in the remaining four months to reach the target of one million units.
He said such figures were “possible.”
Gaikindo’s swing to optimism confirmed a report from international ratings agency Fitch that said the impact on loan growth from the new down payment regulation “may be short-lived, as wealth rises in line with Indonesia’s favorable economic prospects.”
The new rule was feared to hurt sales of cars priced at less than Rp 200 million ($21,000). Cars in that price range now account for about half the market.
Sudirman admitted the new regulation had impacted sales of some car brands. However, as the country’s economy is growing, and consumer purchasing power is strong, demand remains strong, he said.
The country’s low interest rates and manageable inflation also supported consumer spending.
On Thursday, Sudirman also revealed Gaikindo’s plan for the Indonesia International Motor Show, which runs from Sept. 20-30 in Jakarta. Thirty-five car brands will be exhibited at this year’s show, up from 32 last year.
“We will have a theme on Eco-Mobility,” said Johnny Darmawan, of the IIMS chairing committee, referring to environmentally friendly cars.