Indonesia’s automotive industry association said on Monday it was cutting its 2007 domestic sales forecast by 21% as high international oil prices were likely to discourage consumers from buying new cars, a news agency reported.
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Bambang Trisulo, the chairman of the association also known as Gaikindo, told Reuters the volume sales would reach 450,000 units in the world’s fourth most populous nation from an earlier estimate of 570,000.
“For next year, we estimate sales volume of 450,000 units, because consumers’ purchasing power remains weak as high oil prices drove inflation higher along with interest rates,” Trisulo reportedly said in an interview. “If oil prices fall below $US60 a barrel, then (sales volume) can exceed that target.”
The group has also lowered its forecast for this year to 370,000-400,000 units from a previous 400,000-500,000, Reuters added.
The news agency noted that Toyota is the market leader in Indonesia, accounting for 43% of domestic sales in the first four months of the year.
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By GlobalDataPT Astra holds the right to distribute Toyota vehicles in Southeast Asia’s largest economy, along with some other brands such as Peugeot, Daihatsu, and Isuzu.
Indonesia’s auto sector is suffering from a government decision to sharply hike domestic fuel prices in October last year in its effort to scale back costly fuel subsidies following high international oil prices, Reuters added.
The move reportedly sent inflation to its highest level in more than six years and drove interest rates up, which hurt vehicle sales as most were financed by loans.
Sales of cars and trucks hit a historic high of 533,910 units and motorcycle sales topped 5 million in 2005 as consumers snapped up motorbikes and vehicles at a record pace due to low interest rates in the months ahead of the fuel price hike.
In contrast, Reuters said, domestic vehicle sales in the first quarter of 2006 barely reached 80,000 units, about 45% lower than the same period in 2005, and in April, sales of trucks and cars dropped by 56% from a year ago.
