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Jakarta Post

Downward trend in auto sales continues in May amid PSBB

  • Mardika Parama

    The Jakarta Post

Jakarta   /   Wed, June 17, 2020   /   05:18 pm
Downward trend in auto sales continues in May amid PSBB Visitors examine two passenger cars manufactured by PT Honda Prospect Motor in Jakarta on Thursday. The carmaker introduced new vehicles: the New Honda Mobilio and the New Civic Turbo. (Antara/Puspa Perwitasari)

Indonesia’s domestic car sales plunged 95.7 percent year-on-year (yoy) in May, as the downward trend continues amid the government’s large scale social restrictions (PSBB) to contain COVID-19, carmaker association data show.

The government's PSBB program being expanded from the capital to other regions in the country has exacerbated the dwindling demand for cars, Association of Indonesian Automotive Manufacturers’ (Gaikindo) chairman Yohannes Nangoi told The Jakarta Post on Tuesday.

“In April, the PSBB were only implemented in Jakarta, so we could still sell some cars in other regions. However, our sales were impacted even more when the policy expanded,” Yohannes said in a phone interview.

The PSBB have also made it more difficult for consumers to acquire a license for their car, including vehicle registration certificates (STNK) and vehicle roadworthy tests (KIR) for commercial vehicles, Yohannes added.

“PSBB severely disrupt our sales operation as some public offices and showrooms are temporarily closed,” he said.

Three provinces and four regencies/cities across Indonesia are still enforcing the PSBB to curb the coronavirus outbreak, with temporary closures of offices, factories, stores and schools. However, the government has relaxed the PSBB in several places to gradually reopen the economy.

The social restrictions were first implemented in Jakarta by the capital’s administration on April 10, and the number of regions that implemented PSBB then expanded to 26 regencies and municipalities in four different provinces by mid-May.

Car sales have been in free fall since the pandemic started to spread in Indonesia in March, when sales dropped 15 percent, according to data compiled by diversified conglomerate PT Astra International.

The downward trend in auto sales continued in April, with domestic car sales hitting a decades low at 7,868 units, a 90.6 percent yoy drop. In May, only 3,551 cars were sold around the country, a steeper 95.7 percent fall from the same month last year.

Despite the concerning car sales figures, Yohannes said he hoped sales would gradually increase with PSBB relaxation.

“I think we hit the rock bottom in May and I hope that businesses can start to reemerge as the PSBB are relaxed. However, as we’re already in the middle of the month, I don’t think the increase will be significant in June,” Yohannes said.

Previously, Gaikindo made a decision to cut its domestic car sales target this year by 40 percent to just 600,000 units. The association also slashed Indonesia’s car export target to 175,000 units in 2020 from the initial target of 350,000 to 400,000 units, he added.

The country’s exports fell 28.95 percent yoy in May to US$10.53 billion, the lowest level since July 2016.

Automotive industry expert Bebin Djuana projected that demand for domestic cars would remain low throughout the year as the pandemic hit the economy and consumers’ purchasing power.

“The sales recovery will be gradual, rather than a V-shaped spike, because the purchasing power of average Indonesians is greatly affected by the pandemic,” he said on May 18.

Meanwhile, automakers have continued working with financial institutions to offer affordable payment schemes for consumers to ramp up car demand.

“Our plan is to continue our cooperation with financial institutions to provide affordable financial schemes for customers,” Nissan Motor Indonesia’s president director Isao Sekiguchi told the Post in an exclusive interview on Monday.

Sekiguchi expected the sales figures to improve by as early as June to August.