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| Indonesia Monitors (July 2008) |
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Sales: PT Astra says may miss '08 sales target |
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Indonesia's largest automotive distributor, PT Astra International Tbk ASII.JK, may miss its
sales target for this year amid weaker consumer spending due to higher fuel prices, a
company director said.
The government raised domestic subsidised fuel prices by nearly 30 percent to reduce budget subsidies, prompting concerns it would hurt consumer demand for goods such as cars in
Southeast Asia's top economy.
"Our automotive sales are likely to have some 5-7 percent correction from our target," Prijono
told reporters.
Prior to 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 percent of domestic market share, also said higher car prices
could also hurt demand.
Astra -- which distributes vehicles from global carmakers including Toyota, Daihatsu, Peugeot
and Isuzu -- said higher raw material prices such as steel and aluminium, had forced the
company to increase the selling price of its products.
Many analysts say 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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Sales: Indonesia auto sales to top 500,000, even with fuel price hike |
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Indonesian vehicle sales should increase at least 15 percent to more than 500,000 units this
year, even if the government raises subsidised fuel prices by up to 30 percent, the country's automotive industry association said recently.
Bambang Trisulo, the chairman of Gaikindo, said the fuel price hike would not hit the automotive industry as long as the central bank kept the key interest rate BIPG at no higher than 8.5
percent and inflation was below 10 percent.
"If those parameters are met I think we can still top 500,000 units this year. We totally support
the plan. What is important for the government is to keep steady (fuel) supply and prevent any shortages," Trisulo said.
Vehicle sales, a a growth driver in Southeast Asia's biggest economy, were pounded when the government more than doubled subsidised fuel prices in October 2005, pushing inflation to
around six-year highs and prompting the central bank to increase its benchmark interest rate.
But the industry has recovered as the central bank gradually trimmed interest rates.
Vehicle sales rose by more than a third last year to 434,449 units, and some industry analysts
and executives predict 2008 sales will grow to 500,000-550,000 units.
The industry is dominated by PT Astra International Tbk ASII.JK, which sells global brands
including Toyota, Lexus, Peugeot, Daihatsu and Isuzu.
Indonesia's government said recently it would raise fuel prices in a bid to reduce hefty energy subsidies.
The issue of fuel and food subsidies is politically sensitive in Indonesia, which is due to hold
elections next year. Millions of people live on less than $2 a day, and subsidy cuts have
previously triggered social unrest.
Indonesia, Asia's top diesel and gasoline importer, provides heavy subsidies for fuel that help
shield consumers from the market price of crude. |
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Sales: Indonesia car sales down slightly in May |
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New motor vehicle sales in Indonesia was down slightly by 1.82 percent to 50,699 units in
May from 51,640 in the previous month, a leading economic daily reported Monday.
On year-on-year basis, the May sales surged 24.4 percent, reported Bisnis Indonesia, citing
data from the Indonesian Automotive Producers Association (Gaikindo).
In five months ending May 2008, new vehicle sales jumped 33.64 percent to 237,941 units
from 157,892 in the same period last year.
Japanese auto giant Toyota extended its market lead with 80,495 units, trailed in a distance
by Mitsubishi -- which depends largely on light truck and pick-up sales -- with 35,865 units, and
fellow Japanese manufacturers Suzuki (31,542), Daihatsu (27,736), Honda (20,667), Nissan
(13,846), Isuzu (10,216) and bus-truck maker Hino (5,506).
South Korea's Hyundai reported five-month sales of 3,364, Detroit-based Ford 2,469 and other
brands 6,285. |
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Motorcycle: Honda launches new scooter in Indonesia |
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PT Astra Honda Motor, the Indonesian motorcycle unit of Japan's Honda Motor Co. Ltd., launched
a new, smaller version of Vario scooter to grab the market lead from bitter rival Yamaha.
The 110-cc engine Honda Beat, as its name, is expected to become the main weapon to beat
Yamaha in the country's growing scooter market.
Until April this year, Honda's share in the scooter market was 26.3 percent, well below Yamaha,
who grabbed over a half of the total scooter market.
With a price tag of 12 million rupiah (1,288 U.S. dollars), Honda Beat may help boost the share
to at least 45 percent, Astra marketing director Johannes Loman told reporters here.
The company now has greater focus on scooter, whose sales are rapidly growing in already
crowded market, he said.
Honda introduced 125-cc Vario as its first scooter in Indonesia a couple of years ago following Yamaha's success in developing the particular market segment.
Scooter accounted for 18 percent of the country's total motorcycle sales in 2007, increasing
from 12 percent a year earlier, while moped motorcycles have dominated sales for long. |
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Gas Industry: INPEX submits plan for LNG plant in Indonesia |
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Japan's INPEX Holdings Inc has submitted a proposal to build a $19.6 billion floating liquefied
natural gas (LNG) plant in Indonesia, a senior energy watchdog official said.
INPEX estimates there are more than 10 trillion cubic feet of natural gas reserves in its Abadi
field in the Timor Sea, potentially one of Indonesia's biggest fields.
If confirmed, it would make the project the second-biggest new gas field after the Tangguh
project in Papua, which has combined reserves of 14.4 tcf.
"Inpex has submitted the development plan for the Abadi field. A floating LNG plant is proposed.
There will be one LNG train to be built with a capacity of 4.5 million tonnes a year," Priyono,
BPMIGAS chairman, told reporters.
"The cost for the plant is around $19.6 billion. However, BPMIGAS now is evaluating the proposal
and the government will decide whether to approve it," he said.
Priyono said he expected the plant will be finished in 2016.
Indonesia is pushing oil and gas companies to accelerate exploration and production, given
flagging production from its own ageing fields, and in order to avoid expensive imports.
The Japanese firm is currently the sole operator of the Abadi gas field in the Masela block in
eastern Indonesia.
INPEX officials in Indonesia could not immediately be contacted.
In January, Indonesia warned INPEX that it had to submit plans for the field in May, or risk losing
its contract.
However, based on its exploration rights, the INPEX contract runs until November this year. |
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Oil Industry: Indonesia leaves OPEC, GM downsizes
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Indonesia pulled out of the Organization of Petroleum Exporting Countries (OPEC) almost at
the same time as US automobile giant General Motors decided to build fewer pickup trucks and
make an electric car.
"We may be seeing the beginning of the end of the reign of oil and OPEC, because the global
energy matrix is changing," Elie Habalian, a professor of graduate studies in oil economics and
former Venezuelan governor at OPEC, said.
Indonesia joined OPEC in 1962, two years after it was created, and was the only member in southeast Asia. Traditionally, its output was over 1.5 million barrels of crude a day, but that
fell this
decade to under 900,000 barrels per day (bpd), while domestic consumption is over
1.1 million bpd.
It leaves behind its longstanding fellow OPEC members Algeria, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela, and two new member countries that
joined in 2007, Angola and Ecuador. The group extracts over 30 million bpd, equivalent to 37%
of world production.
Since Indonesia is no longer a net exporter of oil, in these new circumstances it does not make
sense to belong to the organization, said Indonesian Energy Minister Purnomo Yusgiantoro,
adding that his country would continue to prospect for oil and, if any is found, will apply to rejoin OPEC.
Although it has signed five new oil and gas exploration contracts with foreign firms and is
planning to put another 46 areas out to tender, Indonesia illustrates how agreements on
new investments may be delayed while older reserves run out.
Around the world, several times this decade, "companies have invested only when it was too
late, consumer countries have used up the 'cushion' [excess of supply over demand] and the
oil market has been invaded by speculators and investment funds," said Venezuelan consultant Evanan Romero.
Against that backdrop, oil prices are shooting up - on Friday they once again surpassed $130
a barrel - while exploring for new reserves is becoming more difficult and costly. World reserves
stand at 1.2 trillion barrels, 75% of which are under the ground in OPEC countries, according
to British oil giant BP.
This month's issue of National Geographic magazine discusses the potential drying up of oil production, which was 1 million bpd a century ago and is now 85 million bpd. Every year
demand grows by 1.5%, while production yield falls by 8%.
Experts like James Mulva, chief executive of US oil company ConocoPhillips, estimate that an
"optimistic scenario" for 2030 is that production might be 100 million bpd, but demand would
be 116 million bpd.
The search for oil to bridge that gap faces stumbling blocks like Indonesia, the decline of
production in Mexico and the North Sea, and stagnation of output in Russia, where production probably peaked last year at just over nine million bpd.
"Even Saudi Arabia was talking six years ago about reaching a potential production of 20 million
bpd. Since then its has increased its capacity from 10 to 12 million bpd, so how long will it take to reach 20 million?" asked Habalian.
In contrast, "when the price of a barrel is above $70, other energy sources become competitive,
and there is a large flow of investments towards them," he said.
Vํctor Poleo, another professor of oil economics, told IPS that, in fact, "the large energy
corporations are using the income from high oil prices to finance a shift away from oil",
which
in his view is aimed at new ways of using coal as fuel.
The world's four largest oil corporations, Exxon Mobil, Shell, BP and Texaco, rake in profits of
between $18 billion and $42 billion a year.
According to Habalian, "There will be oil for several decades to come, but it will give way to a
different energy matrix, especially in transport, and that's where the changes decided this
week at General Motors fit in."
The giant automotive consortium, famed for the (misquoted) 20th century aphorism "what's
good for General Motors is good for the United States," decided shortly before its 100th
annual shareholders meeting to close down four plants (two in the US, one in Canada
and one in Mexico), which means the dismissal of 10,000 workers.
The four factories were making pickup trucks, 4x4s or sports utility vehicles (SUVs). GM chief
executive Rick Wagoner justified the move because "since the first of this year, US economic
and market conditions have become significantly more difficult".
"Record gasoline prices are changing consumer behavior and changing it rapidly, and we
believe the changes are by and large permanent," Wagoner said.
The company may even sell off its Hummer brand, a gas-guzzling civilian version of the
Humvee made by GM for the US army. GM will make smaller and more fuel-efficient cars
and has promised hybrid gasoline-electric vehicles by 2012.
By late 2010 it plans to launch the Chevrolet Volt, a compact electric car running on batteries rechargeable 7,000 times, giving them a useful life of 10 years, and a range of 64 kilometers,
which can be extended to 600 kilometers using its small combustion engine to recharge the
batteries. This motor uses gasoline, and may also use ethanol.
"Before these changes in consumer lifestyles in industrialized countries take effect, because
of [US] gasoline prices of over $4 a gallon, OPEC had already lost leverage. Now it is stock
market speculation that is influencing oil prices," Habalian said.
"Above and beyond events like the withdrawal of Indonesia, which after all has been a
net
oil consumer for years, it's the loss of its capability to guarantee a stable market that
is
hurting OPEC. In spite of the flow of cash to its members, the future of the group looks
rather gloomy," he said. |
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ASEAN Autobiz Magazine
Grandprix International Co., Ltd.
Copyright 2007-2008 All Rights Reserved |
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