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Analysis: Indonesian auto sector: Accelerator required
Based on sales figures released by the Association of Indonesian Automotive Manufacturers (Gaikindo) and the Indonesian Motorcycle Industry Association (AISI), the sales of cars reached 93,000 units in September, up 3 percent month-on-month (mom), but still down 9 percent year-on-year (yoy), while the sales of motorcycles totaled 603,000 units in September, down 3 percent mom and 15 percent yoy (Table 1 and 2)
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Based on sales figures released by the Association of Indonesian Automotive Manufacturers (Gaikindo) and the Indonesian Motorcycle Industry Association (AISI), the sales of cars reached 93,000 units in September, up 3 percent month-on-month (mom), but still down 9 percent year-on-year (yoy), while the sales of motorcycles totaled 603,000 units in September, down 3 percent mom and 15 percent yoy (Table 1 and 2).
For Astra International (ASII), the company saw weaker four-wheel sales of 47,500 units in September, down 3 percent mom and flat yoy, reflecting a market share of 51.1 percent (August 2015: 54.1 percent; September 2014: 46.4 percent). We believe this is a move to lower its inventory levels as retail sales were weak in August.
However, we believe that ASII booked improved September retail sales on the back of improved marketing initiatives. For Nissan (IMAS), the company booked sales of 1,700 units in September, down 6 percent mom and 32 percent yoy, on weak demand and intense competition.
On the motorcycle side, ASII's Honda continued its dominance with an improved market share to 70.5 percent (August 2015: 69.3 percent; September 2014: 65 percent) despite declining sales of 425,000 units, down 1 percent mom and 7 percent yoy. Yamaha's monthly sales were disappointing, coming in at 158,000 units, down 7 percent mom and 25 percent yoy.
On the weaker economic outlook and continued soft farmers' income caused by low commodity prices, we expect 2015 domestic cars sales to reach 1.02 million units (minus 16 percent yoy) and domestic two-wheeled sales to reach 6.4 million units (minus 19 percent yoy). For ASII, we expect a lower four-wheeled market share on tight competition, but a higher two-wheeled market share on several new product launches. As for IMAS, new dealership developments and weak revenues should lead to margin pressure.
Looking ahead, we believe the sector will continue to be plagued by margin erosion stemming from intense competition, necessitating increased marketing costs. This coupled with a soft gross domestic product outlook has us retaining our 'underweight' sector call.
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The writer is a senior analyst at PT Bahana Securities.
