Automotive Industry Split on Impact of New Downpayment Requirements for Sector

BY :RIDHO SYUKRA & CARLA ISATI OCTAMA

JUNE 26, 2015

Jakarta. Executives from the automotive industry are split about the impact of a new regulation that lowers downpayments for car and motorcycle purchases through loans.

Bank Indonesia, the country's central bank, on Wednesday announced that from June 18, customers only need to pay only 25 percent of the full price for a car they wish to purchase using bank loan schemes. The figure has been adjusted from 30 percent.

There was no rule change for commercial four-wheeled vehicles, where the minimum downpayment is set at 20 percent.

Consumers looking to buy a motorcycle now only need to pay a minimum of 20 percent, down from 25 percent.

The changes were made as part of the central bank’s new loan-to-value ratios for the automotive sector, which affect the amount commercial banks can lend to customers for two-and-four wheeled vehicles.

“This [new regulations] can help push car sales, not just for Daihatsu, but also other brands,” said Amelia Tjandra, marketing director at Astra Daihatsu Motor, the sole agent for distribution of Daihatsu cars in Indonesia.

Slowing domestic growth has dragged car sales down lately. Data from the Indonesian Automotive Manufacturers Association (Gakindo), showed national car sales in the January to May period dropped 16.61 percent on last year.

In the first five months of this year, car sales hit 443,328 units, down from 531,805 units in the corresponding period of 2014.

Gaikindo estimated car sales would be around 1 million to 1.1 million units this year, declining slightly from 1.2 million units last year.

However, some in the motorcycle industry are not quite as optimistic.

Margono Tanuwijaya, marketing director at Astra Honda Motor, the sole distributor of Honda motorcycle in Indonesia, said the lower downpayments would impact little on sales.

“I don’t think the impact will be big, the [slowing] market is more affected by falling purchasing power,” said Margono recently.

For two-wheeled vehicles, motorcycle sales in January-May stood at 2.6 million units, according to the Indonesian Motorcycle Manufacturers Association, or AISI. That figure represented a 24.7 percent decline on the same period last year.

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