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PT Indomobil Sukses International, the second largest
automotive distributor and manufacturer in the country, says it is
upbeat that the central bank's plan to further lower interest rates
will help boost vehicle sales.
Indomobil predicts that in 2007, national vehicle sales, excluding
motorcycles, will amount to 370,000 units, higher than the Association
of Indonesian Automotive Manufacturers (Gaikindo)'s initial forecast of
360,000 units.
"Vehicle sales have begun to show healthy increases over the last two
months. We are quite optimistic that the trend will continue next
year," Indomobil managing director Wiwie Kurnia said Tuesday.
Vehicle sales dropped sharply during the first semester of this year as
the impact of the central bank's tight money policy began to kick in.
The central bank began to ease its monetary policy in May amid falling
inflation. Bank Indonesia had reduced its key rate by two percentage
points to 10.75 percent by October from as high as 12.75 percent in
May. The lower rates contributed to the increase in vehicle purchases
during the period between June and September.
In line with continuing macroeconomic stability, analysts estimate that
the BI rate will come down further to between 8.5 percent and 9 percent
early next year.
The health of the local automotive market is heavily influenced by
interest-rate fluctuations as more than 70 percent of vehicles are
purchased on credit.
"Last year, with rates of less than 10 percent, sales stood at more
than 530,000 units. We hope that this year, with the rate currently
above 10 percent, sales will amount to 320,000 units," Wiwie said.
Indomobil president director Makmur Gunadi Sinduwinata said that next
year would provide a perfect opportunity for recovery in the automotive
industry after poor sales for the last year.
He said the government's plan to boost spending on infrastructure in
2007 would also contribute to an increase in the sales of commercial
vehicles, such as trucks.
Indomobil has set aside Rp 100 billion (US$10.9 million) to expand its
distribution network in 2007, Gunadi added.
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