JAKARTA— The government’s plan to provide subsidies for car loans finds warm welcome by automotive industry. They hope that the loan interest relief can help the car market sluggish due to the plague.
Jongkie D Sugiarto (First Co-chairman of the Indonesian Automotive Industry Association, GAIKINDO) said that credit mechanism is the first choice for Indonesian car consumers, as it is easy and does not have to spend large amounts of immediate cash. “In Indonesia, car sales approximately 70 percent are credit or leasing,” Jongkie said.
Business persons, including those of finance companies, have been waiting for the implementation. GAIKINDO hopes that this credit relief can help to restore the national car market. The association projection for domestic sales this year has still not changed, being in the range of 600 thousand units, or shrinking around 40 percent compared to last year.
The market downturn will make car manufacturers slow down their production. Some of them even temporarily close production lines to withstand the pandemic outbreak. With the shrinking car consumption, Jongkie estimates that this year’s production will only be around 700 thousand units to 800 thousand units.
That figure is down compared to last year’s production which reached 1.28 million units. GAIKINDO predicted that last year’s production figures could still not be achieved in the next year, instead it might only be achieved between 2022 or 2023. Yusak Billy (Marketing Director of PT Honda Prospect Motor, HPM) also assumed that the stimulus will help the automotive market. “Down payments and tiny instalments are very helpful in increasing the national car market,” he said.
Most of Honda purchases are made through credit scheme, which according to Yusak around 55 percent of total sales. Usually the consumers choose around three-year to five-year tenor, and Honda frees customers to choose the leases they prefer most. Amidst a declining market, Yusak said that manufacturers would adjust the stock to the conditions of all Honda dealers. The factory also briefly stopped the factory for around 14 days. “There will be a shrinkage (of production) compared to last year but for how much we still need to see the market conditions that continue to change at any time,” said Yusak.
HPM has a plant with an installed capacity of 240 thousand units per year which produces Honda Brio, Mobilio, BR-V, HR-V, CR-V, and Honda Jazz models. (*)