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NEWS UPDATES Asean Affairs        1  March 2011

GM expects Indonesian sales to jump

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General Motors Indonesia expects car sales to surge 33 percent to 6,000 units this year despite looming obstacles, an executive said on Tuesday.

“We will face challenges this year, such as the increase in oil prices and the progressive tax on vehicles,” said Mukiat Sutikno, managing director of GM AutoWorld Indonesia.

Under the new progressive tax, which took affect in January, car owners in Jakarta are taxed 1.5 percent of the vehicle’s value for their first vehicle, 1.75 percent for the second, 2.5 percent for the third and 4 percent for the fourth and above. The tax, which applies to new and used automobiles, was previously a flat 1.5 percent of the vehicle’s value regardless of how many the owner possessed.

Mukiat said the regulation has had an impact on consumers.

“Some of our customers were shocked by the regulation,” he said, adding that tax was a good idea but implementation needed to be improved. When selling cars, the owner often lends the buyer his or her ID card to get the registration. However, many sellers are not aware that they would be liable for the tax in this case instead of the buyer.

Jongkie Sugiarto, vice chairman of the Indonesian Automotive Industries Association (Gaikindo), said the tax’s impact on sales was minimal but the larger problem remained vehicle ownership transfer fees (BBNKB).

“We already told the local councils not to increase BBNKB, but some provinces like East Java, Sulawesi and Kalimantan have increased it from 10 to 15 percent,” he said. “If the result is reduced car sales, we might need to increase car prices.”

However, the automotive market is still positive, he said. GM Indonesia increased its sales to 4,500 vehicles last year, up 72 percent from 2009.

“Our sales in January were about 350 units and about 470 units in February,” he said. He added that about half the sales came from its crossover SUV Chevrolet Captiva, while the Spark and Taxi Lova each contributed about 20 percent.

According to Mukiat, the increase last year came from the launch of new products, particularly with a good response to the city car Spark. He said GM Indonesia plans to add 10 dealers this year to reach 50. It also plans to open a factory in this country but did not provide details.

According to a report in December, at least 256 cars on average were purchased in the capital each day last year.

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