Indonesia's car sales to jump by 15% in 2011: official

Car sales in Indonesia are forecasted to grow between 10 percent and 15 percent next year, even as the government plans to cut subsidized fuel for private vehicles, local media reported here on Saturday.

Jongkie Sugiarto, vice chairman of the Indonesian Automotive Industries Association (Gaikindo), said that the subsidized fuel cut, which takes effect in early January, would have little effect on car sales.

"We forecast car sales could grow by 10 percent to 15 percent to around 800,000 next year. This year, car sales are forecast to reach around 730,000 units," he was quoted by the Jakarta Globe as saying.

Jongkie said on Friday the fuel subsidy cut would only have a psychological effect on potential buyers. "Potential buyers will recalculate their expenses before deciding to buy a new car, but it's not going to be like we're losing nine out of 10 customers," he said. "As long as the economy continues to grow next year, the interest rate, currency rate and inflation rate are stable and bank loans are liquid, we' re optimistic that car sales will continue to grow."

Typically, 80 percent of car purchases in Indonesia are financed through loans and 20 percent are financed with cash. Car sales were recorded at 468,000 units last year and at 600,000 units in 2008.

Data from Gaikindo shows car sales in Indonesia rose 61.4 percent to 625,322 units in the first 10 months of this year, from 387,323 a year ago.

"We see the increase next year as a stable growth. In 2009, the industry was hit by the economic crisis. It rebounded this year, and we're expecting it to rise stably next year," Jongki added.

Indonesia's economy, which expanded by 5.8 percent in the third quarter this year, is forecast to grow by 6.4 percent next year from a targeted 6.2 percent this year, Bank Indonesia said in a statement issued recently that domestic consumption, which accounts for two-thirds of the economy, will remain the engine behind the country's growth.