Car Sales Forecast to Jump by 15% in 2011
Despite a government plan to cut fuel subsidies for private vehicles, auto industry insiders are predicting car sales will continue to grow, though at a more sustainable 15 percent rather than the 61 percent growth recorded in the first 10 months of this year. (JG Photo/Safir Makki) Related articles
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Jakarta. Car sales in Indonesia are forecast to grow between 10 percent and 15 percent next year, even as the government plans to cut subsidized fuel for private vehicles.
Jongkie Sugiarto, vice chairman of the Indonesian Automotive Industries Association (Gaikindo), told the Jakarta Globe the subsidized fuel cut, which takes effect in early January, would have little effect on car sales.
“We forecast car sales could grow by 10 percent to 15 percent to around 800,000 next year. This year, car sales are forecast to reach around 730,000 units,” he said on Friday.
Jongkie said the fuel subsidy cut would only have a psychological effect on potential buyers.
“Potential buyers will recalculate their expenses before deciding to buy a new car, but it’s not going to be like we’re losing nine out of 10 customers,” he said. “As long as the economy continues to grow next year, the interest rate, currency rate and inflation rate are stable and bank loans are liquid, we’re optimistic that car sales will continue to grow.”
Typically, 80 percent of car purchases in Indonesia are financed through loans and 20 percent are financed with cash. Car sales were recorded at 468,000 units last year and at 600,000 units in 2008.
Data from Gaikindo shows car sales in Indonesia rose 61.4 percent to 625,322 units in the first 10 months of this year, from 387,323 a year ago.
“We see the increase next year as a stable growth. In 2009, the industry was hit by the economic crisis. It rebounded this year, and we’re expecting it to rise stably next year,” Jongki said.
Indonesia’s economy, which expanded by 5.8 percent in the third quarter this year, is forecast to grow by 6.4 percent next year from a targeted 6.2 percent this year, Bank Indonesia said in a statement on Dec. 6. Domestic consumption, which accounts for two-thirds of the economy, will remain the engine behind the country’s growth.
Gunadi Sindhuwinata, president director of auto retailer Indomobil Sukses Internasional, said company car sales could grow by 10 percent next year.
“Private car owners will have to spend 50 percent more on their fuel expenses if the government implements the fuel subsidy cut plan. This is still tolerable compared to 2005, when fuel prices soared by 129 percent,” he said.
The government plans to restrict access to subsidized fuel. If the House of Representatives approves the plan, all private vehicles will be prohibited from purchasing subsidized fuel, called Premium, sold at state oil and gas company Pertamina’s stations.
Jongkie said it was high time car owners realized they should switch to higher-quality fuel.
“Cars manufactured after 2005 should use fuel under the Euro 2 standards — in other words, fuel which has a minimum octane number of 91 — instead of using Premium fuel, which has an octane number of 88. This is what we’re trying to convey to the public,” he said. “Using Premium fuel, even though it’s cheap, it has its downsides, from [greater] pollution to possible breakdowns.”
Jongkie Sugiarto, vice chairman of the Indonesian Automotive Industries Association (Gaikindo), told the Jakarta Globe the subsidized fuel cut, which takes effect in early January, would have little effect on car sales.
“We forecast car sales could grow by 10 percent to 15 percent to around 800,000 next year. This year, car sales are forecast to reach around 730,000 units,” he said on Friday.
Jongkie said the fuel subsidy cut would only have a psychological effect on potential buyers.
“Potential buyers will recalculate their expenses before deciding to buy a new car, but it’s not going to be like we’re losing nine out of 10 customers,” he said. “As long as the economy continues to grow next year, the interest rate, currency rate and inflation rate are stable and bank loans are liquid, we’re optimistic that car sales will continue to grow.”
Typically, 80 percent of car purchases in Indonesia are financed through loans and 20 percent are financed with cash. Car sales were recorded at 468,000 units last year and at 600,000 units in 2008.
Data from Gaikindo shows car sales in Indonesia rose 61.4 percent to 625,322 units in the first 10 months of this year, from 387,323 a year ago.
“We see the increase next year as a stable growth. In 2009, the industry was hit by the economic crisis. It rebounded this year, and we’re expecting it to rise stably next year,” Jongki said.
Indonesia’s economy, which expanded by 5.8 percent in the third quarter this year, is forecast to grow by 6.4 percent next year from a targeted 6.2 percent this year, Bank Indonesia said in a statement on Dec. 6. Domestic consumption, which accounts for two-thirds of the economy, will remain the engine behind the country’s growth.
Gunadi Sindhuwinata, president director of auto retailer Indomobil Sukses Internasional, said company car sales could grow by 10 percent next year.
“Private car owners will have to spend 50 percent more on their fuel expenses if the government implements the fuel subsidy cut plan. This is still tolerable compared to 2005, when fuel prices soared by 129 percent,” he said.
The government plans to restrict access to subsidized fuel. If the House of Representatives approves the plan, all private vehicles will be prohibited from purchasing subsidized fuel, called Premium, sold at state oil and gas company Pertamina’s stations.
Jongkie said it was high time car owners realized they should switch to higher-quality fuel.
“Cars manufactured after 2005 should use fuel under the Euro 2 standards — in other words, fuel which has a minimum octane number of 91 — instead of using Premium fuel, which has an octane number of 88. This is what we’re trying to convey to the public,” he said. “Using Premium fuel, even though it’s cheap, it has its downsides, from [greater] pollution to possible breakdowns.”
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