Honda Motor may not be able to match last year’s record sales in Indonesia, but it aims to grab a larger slice of the market in 2006 as industry sales volumes decline, its local chief told Reuters on Thursday.
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The news agency noted that Indonesia’s auto industry is still suffering from a government decision to more than double fuel prices in October and sharp interest rate rises in the second half of 2005, which together have seriously dented motor sales so far this year.
Kenji Otaka, president director of PT Honda Prospect Motor, told Reuters that while overall domestic sales in the second half of this year were expected to be better than the first half, it was difficult to forecast if they would beat the year-ago period.
“Since last September many things happened, like the gasoline price hike (and) inflation and interest rates also increased correspondingly, so the market was showing a declining trend by about 30%,” Otaka said in an interview with the news agency.
“We may not be able to achieve the sales volumes we had experienced last year. I would like to maintain the volume actually, but the market has dropped by some 40% (so far). Last year we had 10.5% market share, so the minimum this year I would like to have is 11%.”
Reuters noted that semand for fuel efficient cars in Southeast Asia’s largest economy has helped Honda sales since it introduced its compact model, the Jazz [aka Fit], which accounted for some 60% of 53,750 Honda vehicles sold last year.
However, competition in the small car market is likely to be tougher this year with the introduction of the rival Toyota Yaris, Reuters said.
The news agency said last year’s fuel price move pushed inflation to its highest level in more than six years, and the central bank increased its reference interest rate to 12.75% from 8.50% over the second half of 2005. Vehicle sales are estimated to have plunged more than 40% in February from the same period in 2005 after dropping 41.5% a month earlier.
Industry experts have told Reuters that 2006 sales could drop as low as 450,000 units from a record 533,910 units in 2005, when consumers snapped up cars and motorbikes with cheap loans.
“If the interest rate comes down slightly then this will give us a favourable scenario,” Otaka told the news agency, without giving any details on how far interest rates needed to drop.
Reuters noted that Honda vehicle sales were down 40.2% to 2,632 units in February after falling by around 25% to 3,598 units in January.
Otaka, who came to Indonesia three years ago, also said the prospect of an increase in electricity prices could hit the sector, as it would further cut disposable incomes and increase costs for manufacturers, the report added.
