Indonesia: Japanese automakers defy auto crisis with large discounts image

While the country is passing through the longest delivery slowdown in the past six years, Japanese automakers remain stubborn about their sales levels in Indonesia.

In order to fend off the slumping market the carmakers have resorted to massive discounts that try to lure into showrooms tight-spending consumers, with Honda, Nissan and Mazda targeting increased levels of sales from the figures of last year. But the overall deliveries have actually gone down every month since last September and have fallen 17 percent this year alone. “The decline is pretty drastic,” comments a Toyota dealership salesman. “We certainly have to work extra hard to sell cars these days.” The automotive market is a crucial indicator of consumption in Indonesia, with the country’s economy crossing the slowest economy growth since 2009 as a 7 percent inflation has tremendously impacted purchasing power.

Last month, automotive industry association Gaikindo decided to modify downwards its delivery target for the year to between one and 1.1 million units from the previous forecast of 1.2 million vehicles. Honda, for example, which wants to increase sales by 10 percent from 2014’s level, has already resorted to promotions that were usually employed in August during the country’s annual automotive exhibition. “Willingness to spend money on big purchases is not there,” comments BNI Securities analyst Thendra Crisnanda. Auto sales usually increase just before Indonesia’s Lebaran holiday in mid-July, with people purchasing cars to visit home towns, though demand this year is far slower than previously envisioned.

Via Reuters