Indonesia’s Car Sales Rise 18% as Astra Loses Market Share to Competition

Car sales in Indonesia grew almost 20 percent in the first quarter this year compared to the same period in 2012, with the market share of Astra International, the country’s biggest automotive distributor, reduced due to fierce competition from its rivals.

Total vehicle sales in Southeast Asia’s largest economy grew 18 percent to 295,912 cars in January to March this year from 250,230 cars in the same period last year, according to data provided by Honda Prospect Motor, the sole local distributor and assembler for the Japanese automaker, citing a report from the Indonesian Automotive Industry Association (Gaikindo).

The first-quarter sales growth pace was higher than the 11 percent pace the market recorded in the same period last year.

Carmakers introduced new models and face-lift versions early this year, in part in anticipation of a slowing in sales due to tighter auto-financing rules, high production costs due to wage increases, and more expensive imported materials.

Honda, for example, introduced a new version of its popular city car the Honda Jazz with an updated look and cheaper pricing variants, as well as an updated family car, the Honda Freed. That helped boost the company’s sales to 26,772 cars during the January-March period, up 229 percent from the same period last year.

“New products as well as refreshing our old models has proven to be well-received by consumers, helping total sales at Honda,” HPM marketing director Jonfis Fandy said.

Astra’s total first quarter sales — the company’s brands include Toyota, Daihatsu, Isuzu, UD Trucks and Peugeot — grew 6.4 percent to 154,764 units. But the company’s market share fell to 52 percent, down from 54 percent at the end of last year, as rivals’ sales growth outpaced it.

Sales at Suzuki Indomobil Motor, the distributor of Suzuki cars, jumped 70 percent in the third quarter to 36,237 cars, backed by its latest series of family car Ertiga. Meanwhile, Mitsubishi’s sales increased 8.2 percent to 36,237 cars. Indonesian Mitsubishi distributors include Bosowa Group and Krama Yudha Tiga Berlian Motors.

Gaikindo predicted that in 2013 the national automotive market would remain steady at around 1.1 million cars, the same number as last year, when it posted the highest sales ever.

Carmakers and distributors might raise prices to offset increasing wage and electricity costs, a depreciating rupiah and tighter car loan requirements. More than two-thirds of car purchases are made on credit.

Bank Indonesia last year increased minimum down payment requirements for commercial bank loans for car and motorcycle purchases.

For cars, the minimum down payment was increased to 30 percent of the selling price, while the requirement for motorcycles was raised to 25 percent.

Car sales, along with cement sales, is a benchmark indicator of Indonesia’s household consumption, which accounts for more than half of the gross domestic product.