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Car sales recovering but new threat looms
Domestic car sales enjoyed a good month in October as 40 percent more cars were sold compared to a month before, signaling a steady move towards full market recovery
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omestic car sales enjoyed a good month in October as 40 percent more cars were sold compared to a month before, signaling a steady move towards full market recovery. Producers, however, were not so sure.
The total number of cars sold in October reached 52,241, significantly up from 37,209 in September when sales suffered from a shorter period of working days due to the Ramadan holiday season.
Toyota Astra Motor (TAM) President Director Johnny Dharmawan Danusasmita said he had already predicted that car sales growth would jump in October.
“September was a short month because of the fasting month and the Idul Fitri holidays. That is why our sales in September were small,” Johnny said.
TAM is the subsidiary of PT Astra International, which as of October retained the biggest share of the market by controlling 58 percent of car sales in the country. Astra International sells cars manufactured by Toyota, Daihatsu, Nissan Diesel, Isuzu and Peugeot.
Astra’s head of public relations, Yulian Warman, said the company tried to boost sales growth, which had plummeted since last year due to the global financial crisis, despite the company offering various sales schemes to compensate.
“We offered discounts and insurance to attract customers,” Yulian said.
Overall, 389,711 cars, including those not related to Astra, were sold in Indonesia in the first 10 months.
Albeit down by 25.3 percent compared to sales performance in the first 10 months of last year, sales figures have been growing steadily each month, beginning in March, with the exception of September.
Johnny confirmed that car sales were on a positive trajectory for continued growth, especially as indicated by the October sales, which almost reached the same figure in October last year.
The positive trend, however, will face a threat next year, he said.
“Car sales growth will be affected by the upcoming regional government regulation on progressive taxes for cars. The regulation will hamper car sales growth next year,” he said.
The House of Representatives passed the law on regional taxes and levies in August, introducing new vehicle tax regulations by which car owners are to pay more tax for each additional private vehicle owned.
The maximum tax rate for a single owner is 10 percent of the value of the vehicle.
From the government viewpoint, it expects the progressive tax to help boost the revenue of local administrations to enable them to deal with rapidly worsening traffic conditions, in many big cities in the country.
Jakarta alone for instance, is home to more than 2 million private cars and 6 million motorcycles, according to the Jakarta traffic police.
The number of vehicles jamming the streets of the capital goes up by about 9 percent every year, dwarfing the expansion of its roads, which only rises 0.01 percent annually.
Isuzu Indonesia’s chief of sales operations, Supranoto Tirtodidjojo, expressed the same opinion, saying the implementation of the new law might cause a negative shock to car sales just like the one that hit after the global crisis.
“We have now enjoyed a sort of a rebound after the shock triggered by the crisis. So, our plan is to manage how to recover faster when a similar shock hits our sales once the progressive tax comes in,” Supranoto said
The Indonesian Automotive Industry Association (Gaikindo), which groups together the country’s car distributors, is now consulting with the government on how to arrive at the best way to implement the new law without major negative affects on the car industry.
