T

he decline in rupiah against the US dollar severely affected the country'€™s car and motorcycle sales in February, both sectors seeing drops of more than 20 percent.

According to new sales data issued by the association of Indonesian car producers (Gaikindo), car sales dropped 20.64 percent to 88,738 units in February from 111,824 units reported in the same month in 2014. Motorcycle sales, meanwhile, declined by 22.11 percent to 556,091 units in February from 679,086 units in the same month last year.

The data also reveal that the publicly listed Astra International suffered a decrease in its share of domestic car sales to 49 percent as of February from 54 percent in the same month of 2014. On the other hand, the company'€™s motorcycle-market share rose to 68 percent from 62 percent in February last year.

In domestic car sales, Toyota remained the brand with the highest sales as of February, followed by Daihatsu, Honda, Mitsubishi and Suzuki. Meanwhile, Honda maintained its position at the top of domestic motorcycle sales in
the first two months of this year, followed by Yamaha, Kawasaki, Suzuki and TVS.

For the whole of 2014, domestic car sales saw a slight decrease to 1.2 million units from 1.22 million in 2013, while motorcycle sales grew 1.55 percent to 7.86 million units from 7.74 million in 2013.

Noegardjito, the secretary-general of Gaikindo, said the 20 percent slump in car sales was partly caused by the fall in the Indonesian currency against the US dollar, which had caused an increase in car prices. With the rupiah under constant pressure since January, cars, both locally produced and imported, have become more expensive. In addition to the weak rupiah, high inflation had also contributed to the drop in car sales, he added.

'€œThe fall is also due to seasonal factors. Sales tend to be lower at the beginning of the year than the second quarter,'€ Noegardjito told The Jakarta Post on Monday. However, Noegardjito said, the automotive industry had also been affected by higher lending rates from rising inflation as well as people'€™s weaker purchasing power compared with 2013. The inflation rate fell to 6.9 percent year-on-year (yoy) in January after having risen to 8.36 percent, while economic growth slowed to 5 percent in the fourth quarter last year, according to the Central Statistics Agency'€™s (BPS) February data. Despite the drop in inflation in January, the impact on the lending rate persisted, he explained.

Astra Daihatsu Motor marketing director Amelia Tjandra and Suzuki Indomobil Sales director Davy Tulian echoed Noegardjito'€™s opinion that declining purchasing power resulting from the fall in the rupiah and high inflation were the main causes of the sales drop.

Bloomberg data show that the rupiah weakened by 0.30 percent to 13,245 per dollar on Monday during the close of trade at the spot market. The Indonesian currency has declined by about 7 percent in the last two months.

Amelia said the decline in sales had also affected other business sectors, as people were mostly in '€œwait and see mode'€. The situation was exacerbated by seasonal factors, Davy added.

'€œThe weakened rupiah has triggered a surge in car prices, while many distributors offer big discounts at the beginning of 2015. With this situation, potential buyers have delayed their purchases, expecting more discounts,'€ Amelia claimed.

Among all industries, the automotive sector has been the hardest hit by the sluggish demand, according to Agustinus Indraputra, general manager of the marketing, planning and analysis division at Astra Honda Motor. '€œProducers of consumer goods have generally experienced the same thing, so it seems more than likely that people'€™s purchasing power has been severely hit,'€ Agustinus said.

In addition, Agustinus said he expected that there would be a slight increase in the rupiah in the second half of this year, as the currency depreciation had also affected the industry supplying imported automotive components.