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May 28, 2008

INDONESIA: Key car distributor may miss sales target

Automotive distributor PT Astra International may miss its sales target for this year due to weaker consumer spending caused by higher fuel prices, a company director said on Wednesday.

Automotive distributor PT Astra International may miss its sales target for this year due to weaker consumer spending caused by higher fuel prices, a company director said on Wednesday.

The government on Saturday raised domestic subsidised fuel prices by nearly 30% to reduce budget subsidies, prompting concerns it would hurt consumer demand for goods such as cars in Southeast Asia’s top economy, Reuters reported.

“Our automotive sales are likely to have some 5-7% correction from our target,” Prijono told the news agency.

Before the fuel price hike, a senior Astra official had said the third largest company on the Indonesian stock exchange by market value, expected to sell around 250,000 new vehicles this year, up from 223,104 units last year.

Astra, which controls about 50% of domestic market share, also said higher car prices could also hurt demand.

Astra – which distributes vehicles from automakers such as Toyota, Daihatsu, Peugeot and Isuzu – said higher raw material prices such as steel and aluminium had forced it to increase the selling price of its products.

Many analysts have told Reuters the government’s decision to hike subsidised fuel prices will lead to higher interest rates, which could slow down vehicle sales as the majority of them are financed by loans.

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