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The industry hit hardest by the twin fuel price hikes of 2005
was perhaps the automotive industry, more precisely, the new-car
market. No surprises there, considering cars are a family's
second-largest "investment" and unlike the home, they run on fuel.
The recovery that's now taking place in the car market has switched
dramatically in favor of used cars, not new cars. These conclusions are
based on Roy Morgan Single Source, Indonesia's largest syndicated
survey with 25,000 respondents annually, covering 90 percent of the
population over the age of 14.
The survey also reveals that on the broader canvas of transportation,
the use of public transportation has also remained flat since September
2005. People, especially at the lower end of society, are using
transport more for essential travel and seemingly less for leisure.
About 60 million people around the country regularly travel by bus,
while almost million use the train. These numbers have remained flat.
In contrast, two-wheeler buying intentions are now on the way up
reflecting the confidence of the middle class.
Moving up the socio-economic ladder, about 12 million people often
travel by taxi, almost unaffected by recent inflation, but only 4
million households have a car in urban Indonesia. These do not include
institutionally owned vehicles like company or government-owned cars
used at home after working hours. Nor do these figures include the few
rural homes that have cars.
Demand has dipped for cars, and crashed in the case of new cars. The
signs of sluggishness over the near term are a major problem for the
automotive industry. On the other hand, the administrative authorities
in major cites like Jakarta, for example, already overwhelmed by
traffic congestion, are probably sighing with relief.
Dealers in used cars are in for good times ahead -- witness the upward
swing in demand. How is the new car industry reacting? Only by
understanding the people who have dropped out of the market, and
analysing the needs of people who remain interested in new cars, will
automotive manufacturers be able to chart a course for the future.
Any attempts to simply "move metal" off the factory floor based on
knee-jerk reactions will be fraught with danger. For years, the Toyota
brand has gone from strength to strength with well over half of all
people planning to buy a new car actively considering the brand, across
all categories.
A lot of that success is thanks to the ubiquitous Kijang. Today, that
grip on the new car buyer's mind has loosened with only 43 percent of
intending purchasers planning to buy a Toyota model. The signs of
change in market dynamics were ignited by the price of fuel, so that a
different marketplace exists today, which is a problem for some and an
opportunity for others.
These are the facts that Toyota needs to respond to in its attempts to
protect market share and brand equity. These are the same facts that
all their competitors need to understand if they wish to seize the
opportunities presented by a market in flux.
This is yet another industry that has ignored the influence of the
Indonesian woman. All of the "evidence" that carmakers have
traditionally based their marketing upon has consisted of registration
papers and financing documents, usually in the name of the man of the
house.
Yet, over a third of the people currently intending to buy a new car
are women. Whose name finally appears on the documentation is almost
irrelevant. The people who often, but not always, influences the
decision to purchase is the primary owner-driver, so that it is these
people who are vital to success in the marketplace.
If the current demand for new cars stands at 168,000 units, isn't it
important to understand the key drivers, as well as the lifestyles and
needs of the owner-drivers themselves?
But look around you and what do you see in the media out there?
Billboards can be justified by the need to command a "presence" but the
use of free-to-air TV defies logic.
The fact that almost everybody watches TV everyday is not an
intelligent rationale when it's obvious that most of the viewers won't
be buying a new car any time soon. If "the medium is the message", then
Pay TV would be a far more focussed choice.
Combine that with selected newspapers and magazines, radio stations in
cities where the intenders reside, and promotions and financing
packages offered from appropriate shopping malls, then today's scarce
resources would end up being put to better use.
All it takes to verify the media selections is a simple quantification
of people intending to buy, say, a "small car", the people who will
consider or reject the makes within that segment and the capability of
each title, radio station, channel or even major shopping mall to reach
that identified group.
Savvy marketers and their agencies are doing precisely that today,
across every conceivable product category. It gives a whole new meaning
to that oft-abused word, "accountability", especially when all the
stakeholders of the brand can monitor progress every 90 days.
I should add that I have nothing against TV and I don't have any
pecuniary interest in any other media, either. Nor has the invitation
to speak at this week's seminar hosted by SPS, the Publishers
Association, led to a "plug" here for the printed medium. A detailed
look at the Indonesian media scene will be featured in this column next
Tuesday.
The contributor is an advertising professional, turned researcher and
consultant, based in Melbourne. He has lived and worked across the Asia
Pacific region, including Indonesia. He remains a regular visitor.
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