Car sales hit all-time high in July ahead of Idul Fitri

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Not business as usual: A shopper passes a car dealer at a department store in Jakarta in a photo taken on July. The newly introduced rule of a 30 percent minimum down payment has decreased the sales of new cars by 15 percent this month. (JP/ R. Bertho Wedhatama)

Indonesia’s car sales hit a monthly high in July on the back of robust demand despite the higher down payment requirement introduced by the central bank that went into effect in June.

Car sales rose by 15.56 percent compared a year earlier to 102,512 units, according to Indonesian Automotive Industry Association (Gaikindo) statistics.

The surge in car sales was partly driven by seasonal factors as people bought more cars ahead of the Idul Fitri festivities, Gaikindo chairman Jongkie D. Sugiarto said on Thursday.

“In addition to this factor, there are also realized purchase orders from the previous months when the down payment was still relatively low,” Jongkie said. The industry still could not predict the outlook for the full year, he added.

“But once sales are stable, they can break the 1 million-unit mark,” Jongkie said.

Overall, a total of 637,778 cars were sold in the January-July period, up by 25.86 percent from the same period last year.

At the start of the year, Gakindo expected car sales to rise by 5 percent to 940,000 units, but recently revised its prediction to 875,000 units due to the central bank’s new rule on down payments. Local players estimate the new rule will likely push down sales of cars priced at between Rp 100 million (US$10,600) and Rp 200 million.

The central bank raised the minimum down payment for automobile purchases from 10 percent to 25 percent of the price for commercial vehicles and to 30 percent for passenger cars and from 5 percent to 25 percent for motorcycle purchases. This regulation, which went into effect on June 15, was implemented to avert a potential credit bubble and excessive jump in consumer loans.

Astra Daihatsu Motor (ADM) marketing director Amelia Chandra said that in line with the overall industry, higher demand ahead of the Idul Fitri holiday drove sales up 22 percent from a year ago to set a monthly record of 14,353 units sold in July.

“As people return to their hometowns, they want to buy new cars. So, this factor temporarily offset the impact of the higher down payment requirement issued by the Bank of Indonesia [BI],” she said.

The firm is still upbeat it can reach its target to sell 150,000 units this year, according to Amelia.

Davy Tulian, the sales director of PT Suzuki Indomobil Sales, said that his firm also hit a new monthly record high by selling 13,233 units in July, up by 143 percent from last year. The firm got a significant boost from its new multi-purpose vehicle, the Suzuki Ertiga, which sold 3,839 units throughout the month.

As of last month, the firm had already received more than 26,000 purchase orders for the seven-seater Ertiga, which is a completely knocked down (CKD) model manufactured in India and assembled locally.

In addition to this model, Suzuki also saw robust sales of other models, including its Estillo city car and various pickups.

“The excellent sales in July also help us become the number three player in the national car market,” he said. Suzuki lost its status as the third-largest player in the domestic market in 2008 to Mitsubishi.

Davy said that the firm was confident it could grab a 15 percent share of total sales this year as it already controlled 10 percent as of July.

“Up to present, there is high demand for our cars but we only have a limited supply. In the second semester, the supply will pick up and help us sell more cars,” he said.