ASEAN KEY DESTINATIONS
Indomobil sets aside $60 million for new retail outlets
Major automotive distributor PT Indomobil Sukses Internasional plans to open up to 20 new retail outlets across the country this year to boost sales amid growing competition from other car distributors, according to the company’s senior executive.
Indomobil’s president director Jusak Kertowidjojo said in Jakarta on Friday that the company would spend up to US$60 million to finance the opening of the retail outlets, which are set to include showroom facilities. Six of the planned retail outlets were opened in the first quarter of the year.
Indomobil is the country’s authorized distributor for several Japanese and European car brands, including Suzuki, Nissan, Hino, Renault, Datsun, Audi, Volvo and Volkswagen.
However, the company’s chief commissioner Soebronto Laras said the planned opening of the new retail outlets could be changed depending on market demand and the availability of land.
“The opening of the new showrooms is based on the market conditions in the respective area. Difficulties in acquiring land could also hamper the retail outlet expansion,” Soebronto told reporters after the company’s annual shareholders meeting in Jakarta.
Soebronto said that infrastructure facilities and logistics problems in regional areas remained a major challenge for the automotive industry in opening showrooms and dealerships outside Java.
“Building a showroom in Jakarta could cost about Rp 40 billion [3.34 million]. So, if the market does not produce as much demand as we project, we risk the problem of overstocking,” he added.
Meanwhile, Jusak also said that Indomobil was currently in the process of opening a Volkswagen car production factory in Cikampek, West Java. However, the company is reportedly still in talks with the German car company over its specifications.
“The building intended for the factory has been completed. We are now waiting on further progress from our talks with Volkswagen in terms of the production and investment details,” Jusak said.
Furthermore, he said that Indomobil had experienced a surge in spare parts sales in the lead-up to the Ramadhan season, due to the increased demand generated by the Idul Fitri exodus at the end of the fasting month.
Soebranto said that the government’s Low Cost Green Cars (LCGC) program had significantly helped to increase demand in car sales in the country, as the tax incentives provided under the program have made LCGCs more affordable for prospective buyers.
Like other LCGC brands, Indomobil’s Karimun Wagon R has received a positive response from the market. The Karimun Wagon R is also exported to Pakistan.
Davy Tuilan, the sales director of Suzuki’s local marketing arm, Suzuki Indomobil Sales, said previously that Indomobil expected to grab a 20 percent share in the LCGC market, where it faces tight competition with the Toyota Agya, Daihatsu Ayla and Honda Brio Satya. Currently, Indomobil holds a 15.8 percent share of national sales.
Sales of the Karimun Wagon R, which was introduced late last year, will have a significant impact on Indomobil’s target to reach 16.7 percent of sales in the domestic market, which, according to business groups, will total 1.2 million units, up from 13.3 percent last year.
In 2013, Indomobil managed to earn Rp 20.09 trillion in net revenue, a 1.59 percent increase from the Rp 19.78 trillion earned in 2012. However, the company’s net profit in 2013 decreased by 33.59 percent from Rp 801.73 billion in 2012, to Rp 532.46 billion in 2013. Jusak attributed the decrease to factors such as higher interest rates, the weakening rupiah and a shaky economy.
Indomobil earned Rp 243 billion in net profit for the first quarter of 2014, which represented about a 30 percent increase from the Rp 185 billion profit earned in the same period in 2013.
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