Sabtu 22 Sep 2012 23:36 WIB

Indonesia set to achieve car production target

Foto: Republika/Darmawan

The 20th Indonesia International Motor Show (IIMS) 2012 is held in Jakarta on September 20-30.

REPUBLIKA.CO.ID, JAKARTA - Indonesian car makers are set to produce 1 million units of cars this year amid complaint about the regulation raising the down payment for car purchased on credit. Bank Indonesia has issued a regulation requiring banks to demand a 25 percent down payment for cars purchased with credit.

The policy is to prevent an increase default amid global uncertainties. The increase in down payment from normally 10 percent is feared to result in a decline in sales.

The Association of Motor Vehicle Industries, however, expressed optimism to achieve the sale target of 1 million units this year up from around 894,000 units last year. Next year the association predicted sales would increase further by 5 percent, its chairman Sudirman MR said at the Indonesia International Motors Show (IMMS) 2012 on Friday. Sudirman attributed strong demand for cars in Indonesia to steady growth of the country`s economy.

"The purchasing power of the people will continue to improve if the country`s economy continues to scale up," he said.

Next year production would be boosted not only by strong demand on the domestic market but also by growing exports, he predicted. Another chairman of the association Johny Darmawan said Indonesia`s exports of cars in completely built-up (CBU) form surged 67.2 percent year-on-year to 107,980 units in the first seven months of the year.

Darmawan said a strong growth was also recorded in the exports of cars in completely knocked down (CKD), up 31 percent on-year to 61,095 units. He said the country`s car sales on the domestic market rose 25.9 percent to 637,000 units in the January-July period.

Last year, Indonesia was the largest car market in ASEAN putting behind other major car producing countries in this region including Thailand and Malaysia. With sales of 894,000 units Indonesia accounted for 34.7 percent of total car market in this region.

"We are convinced Indonesia will continue to maintain the lead," Darmawan said. Meanwhile, five auto makers in the country are expanding their production capacity, Darmawan said.