Limited Local Production Makes Indonesia Import 96 Percent of Sedans

By webadmin on 11:31 am May 24, 2012
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Jakarta Globe

Indonesia still imports 96.23 percent of its sedans because of limited local production, the chairman of the Association of Indonesian Automotive Industries (Gaikindo), Sudirman Maman Rusdi, said on Wednesday.

“Completely knocked down (CKD) sedan imports or those of completely built up (CBU) are reaching 96.23 percent of the total number of sedans sold, as local production only covers 3.77 percent,” Sudirman said.

He was quoted by the Antara news agency as saying the inharmonious tax structure was hindering higher local assembly production and therefore pushing imports up.

Several sole agents from foreign automotive brands have already begun to assemble sedans locally, such as Hyundai Indonesia and Mercedes Benz Indonesia. Hyundai imports its Avega sedan in CKD form and assembles the cars here and Mercedes is also doing the same thing for several of its sedans.

Gaikindo data showed first quarter sales of sedans stood at 4,130 units and if taxis were added, the figure would be at 5,939 units.

The high level of imports is also causing the local component industry to suffer. Imports reduce the need of sedan producers to use locally manufactured equipment.

Sudirman said the tariff structure needed to be reviewed in order to encourage domestic sedan production. He said Gaikindo was hoping that a regulation would be issued this year to do away with tariffs for incompletely knocked down components.

However, he also added that the dropping of tariffs will not be enough to encourage a more competitive domestic automotive industry because the luxury tax on sedans remained high.

“Sedans with engines of up to 1,500 cc are still being slapped with a 30 percent luxury good tax, while those with engines of 1,501 -3,000 cc get 40 percent and above 3,000 cc 70 percent. Without an adjustment on the luxury goods tax it will be difficult for sedan prices to meet a good economic scale,” Sudirman said according to Antara.

Meanwhile, Jonfis Fandy, the marketing and after sales service director of Honda Prospect Motor (HPM) said three Honda sedans sold in Indonesia — City, Civic and Accord — were still imported in their CBU form from Thailand. The low market for sedans in the country, compared to other car types, made the company rely more on imports, he said.

“But if demand rises to a high level, Honda will not preclude the possibility of studying the production of sedans in Indonesia,” he said.

He said the extensive flooding in Thailand last year made HPM miss the sale goal of sedans in the January-April period of this year.

“But with the return of conduciveness in factories in Thailand, this May, we will be able to sell Honda City and later in June Honda Civic and Honda Accord in July,” Jonfis said during a New Honda City launch here on Wednesday.

Jonfis said the company targeted a 40 percent market share for mini sedans in Indonesia. The share of HPM’s two mini sedans — City and Accord — was at 28 percent last year.

At the launch, Honda announced a sales target of 2,400 units in 2012 for the new Honda City, a car that uses the Euro-4 standard and will be sold at around Rp 262 million to Rp 286 million ($28,200 to $30,800) on the road for Jakarta.

Investor Daily