Toyota lowers Indonesia sales target due to sluggish demand

The Jakarta Post, Jakarta

The country's largest automobile manufacturer, PT Toyota Astra Motor, has lowered its new car sales target for this year to between 120,000 and 130,000 units, or between 28 and 34 percent less than last year's sales, amid slow demand during the first semester.

The company sold a total of 182,724 cars last year.

During a media briefing Tuesday at the launching of Toyota's new Corolla Altis, Toyota Motor Astra president Johnny Darmawan predicted that 2006's domestic car sales would fall by 34 percent from 533,910 units last year.

"This year's domestic sales are likely to range between 350,000 to 400,000 units," he said.

He based his forecast on this year's first quarter car sales, which dropped 44.8 percent to only 79,414 units from 143,963 units in the same period last year.

In line with the national trend, Toyota Astra Motor's car sales up to March of this year declined by 22.3 percent to only 34,478 from 44,348 units in the first quarter last year.

Johnny said that the sluggish performance of the automotive industry was due to a drop in consumer purchasing power resulting from high interest rates and last October's fuel price increases.

The central bank raised its key interest rate to 12.75 percent in December from 8.5 percent in July to curb inflation and the decline in the rupiah. The rate remains at 12.75 percent until now, but Bank Indonesia indicated Tuesday that it might soon lower the rate amid signs of easing inflation.

Despite the drop in sales, Toyota Astra Motor remains the market leader, with a 43.4 percent market share in the first quarter.

Johnny said that for the whole year, the company was targeting 30 percent of the total domestic market as compared to last year's 34.2 percent.

He predicted a 15 to 20 percent decrease in revenue due to the drop in sales. He did not give last year's figure.

Johnny said that due to the poor condition of the automotive industry, a decline in revenue was inevitable. Therefore, his company was striving to reduce costs through such measures as the introduction of short-time working.

"We do not plan to lay off workers. To reduce costs, we will reduce working days from 23 days to only 16-18 days per month," he said

Johnny said the company had launched the new Corolla Altis to maintain its position as market leader here. He noted that since the Altis was first launched in 2001, it had gained a sedan market share of more than 50 percent.

After launching the Toyota Yaris earlier this year, the company introduced a new sales campaign for the second quarter -- April to June -- in which people can purchase Toyota cars on credit at an annual interest rate of only 5 percent, or buy in cash and receive two years of free service. (08)
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