(For other news from the Reuters ASEAN Summit, click on www.reuters.com/summit/ASEAN14)
By Fathiyah Dahrul and Andjarsari Paramaditha
JAKARTA, March 26 Indonesia's auto market will
probably overtake Thailand as Southeast Asia's biggest in 1-2
years, the CEO of its biggest auto distributor PT Astra
Prijono Sugiarto also predicted that total Indonesian sales
next year could hit 1.4 million after being roughly flat this
year, and he expects a growing share to be so-called low cost
green cars (LCGC), which his country's car makers started
producing last year.
"For LCGC, we are trying to increase production facilities.
We are now at about 10-12,000 units per month. That would be
nice to increase to 15-20,000 per month," he told the Reuters
ASEAN Summit on Wednesday.
The chief of Astra International noted that car
penetration in Indonesia is still only 40 cars per thousand
people in a country whose population tops 240 million. The fast
emerging middle class is the chief target for LCGC cars.
Sugiarto also predicted that total Indonesian auto sales
could be 1.4 million vehicles in 2015, which would be a 17
percent increase from about 1.2 million this year. Low-cost cars
could account for up to 20 percent of sales this year, he added.
Astra, Indonesia's biggest listed company by market
capitalisation, distributes cars for Toyota, Daihatsu
and Honda, and is controlled by
Singapore-listed Jardine Cycle & Carriage Ltd.
Astra accounts for more than 50 percent of all auto sales in
EYEING NEW MARKETS
Around 15-20 percent of Astra's car production is exported
to other Southeast Asian countries, as well as the Middle East,
South Africa, Mexico and Venezuela.
Indonesia aim to eventually supplant Thailand as Southeast
Asia's biggest automotive production base. Investors from South
Korea and Japan are bullish about the outlook for the Indonesian
industry, according to Mahendra Siregar, head of the country's
Astra also said it is eyeing expansion to Cambodia, Myanmar
and Vietnam, focusing on automotive and financial-services
"We have a special team to evaluate business opportunities
in Myanmar, Cambodia and Vietnam," Sugiarto said.
Jardine Cycle & Carriage has entered Myanmar as a
distributor for Mazda and Mercedes Benz.
Jemmy Paul, head of investment at Jakarta-based Sucorinvest
Asset Management, said sales to other ASEAN countries should
drive Astra's revenue higher.
"I think the idea of exporting the (LCGC) cars is already
considered since the Japanese principals have made a huge
investment in Indonesia," said Paul.
Astra's financing business PT Astra Sedaya Finance
plans to sell 2 trillion rupiah ($175.55 million) in
bonds and seek bank loans totalling $330 million as part of its
financing expansion this year. Another unit, Federal
International Finance, plans to issue three-year
bonds worth 1.55 trillion rupiah next month.
"The room for improvement in the financing business remains
there, however, we believe the impact to the ASII auto division
performance will be limited, said Frederick Daniel, an equity
analyst at Trimegah Securities. "Nonetheless, it is worth noting
that finance division earnings contributed 22 percent of ASII's
total earnings in 2013."
Shares of Astra International closed up 0.7 percent at 7,300
rupiah on Wednesday, compared with a 0.5 percent rise in the
Jakarta benchmark stock index. The shares have risen
more than 7 percent this year
($1 = 11,392 rupiah)
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(Additional reporting by Eveline Danubrata; Editing by Jonathan
Thatcher and Richard Borsuk)