Astra sees the Indonesia’s automotive sales will going flat in 2016

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Photo Astra

JAKARTA (TheInsiderStories) – Indonesia automotive manufacturer, PT Astra Internasional Tbk (IDX: ASII), sees the car and motorcycle sales would not increase under the lowest of purchasing power of the consumer and economic slowdown compared to last year. Investor relation officer, Ira Ardianti, said sales of both two and four wheeled have been flat in the past five months.

The Association of Indonesia Automotive Industry (GAIKINDO), however, said car sales in Indonesia (from factories to dealers) surged 11 percent to 87,919 units in May 2016, the second straight month of rising car sales year-on-year.

In the first quarter of 2016, Astra’s car sales dropped to 127,000 units from 137,000 units in the same period last year. In April and May, Astra’s sales of cars totaled 31,000 units and 33,000 units respectively.

Its sales of motorcycles also shrank to 1.1 million units in the first quarter of 2016. In April and May sales were recorded at 348,000 units and 338,000 units respectively. This is encouraging after being on the decline for 16 straight months previously.

GAIKINDO chairman Jongkie Sugiarto attributed the increase mainly to delivery of new models ahead of Idul Fitri holiday.  He is embarking into 2016 with optimism. Jongkie predicted that domestic car market in 2016 is likely to increase 5 percent.

“The volume may reach 1,050,000 units, or even better 1,100,000 units,” Mr Jongkie said.

The optimism springs from Indonesian macro economy in its National State Budget 2016. The optimism includes the government’s target on economy by 5.3 percent in 2016.

Other factors that boost the optimism include stronger Rupiah’s exchange rate, low inflation, higher financing on car sales, growing global economy, infrastructure development, and central bank rate.

In 2015, Indonesian domestic car market booked sales of 1,013,291 units, down 16 percent from that in 2014 about 1,2 million units. GAIKINDO is certain that sedan sales will rise if government cuts the tax by 30 percent.

Another incentive that industry needs from government is tax cut for car components, which will encourage industry.  Some carmakers have built manufacturing facilities in Indonesia with production capacity of about 2 million units a year.

Of that capacity, 200,000 units are for export that becomes backbone car manufacturers in Indonesia, apart from the huge domestic market. GAIKINDI is expecting that car export from Indonesia will increase to 600,000 units in the next three years.

The post Astra sees the Indonesia’s automotive sales will going flat in 2016 appeared first on The Insider Stories.

Source: The Insiderstories
Astra sees the Indonesia’s automotive sales will going flat in 2016

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