Astra Otoparts banks on green cars to grow sales

JAKARTA. Component maker Astra Otoparts says it is upbeat about increasing its sales albeit a slowdown in the automotive industry on the back of increasing prices and the demand of low-cost green cars (LCGCs).

The company, part of the country’s largest automotive producer Astra International Indonesia, expects in 2015 to increase sales by more than last year’s estimated 14 percent growth.

Astra Otoparts finance director Robby Sani said the increasing price of cheap green cars was a good thing for the automotive parts producer as the company was now able to adjust its selling price.

“This is positive catalyst for our business, because we no longer need to carry out an efficiency strategy to push down prices,” he said. “With the increasing prices of automotive products, we also have the room to raise our prices.”

While increasing prices would burden consumers, Robby was upbeat that his company would book satisfying sales growth this year as amid plunging oil prices, the decreasing subsidized fuel price was expected to ease pressure on its customers and maintain buyers’ appetite for purchasing cheap cars.

Robby refused to disclose the firm’s sales target for this year, but said it would be higher than last year and that his company was still surveying market conditions for a possible price adjustment in the next three to six months.

Based on Robby’s projection that the company’s total sales could be calculated through its average quarterly sales, Otoparts is estimated to pocket Rp 12.24 trillion (US$963.4 million) in revenue from last year, up by 14 percent from Rp 10.7
trillion.

“There was, however, an expected slowdown in the fourth quarter of last year following the subsidized fuel price hike, but the sales drop was very little,” he added.

Otoparts recorded Rp 9.18 trillion in the first nine months of 2014, up from the Rp 7.76 trillion recorded in 2013. Its profit was up only slightly to Rp 643.11 billion between January and September 2014, from Rp 638.44 billion the previous year, because of rising costs.

According to data from the Association of Indonesian Automotive Manufacturers (Gaikindo), as many as 159,905 LCGC wholesale units were sold between January and November 2014.

This number made up 14 percent of the 1.13 million vehicles sold in the same period. The sales of LCGCs surpassed original business expectations of 120,000 units.

Meanwhile, total car sales as of November stayed at the same level compared to the same period in 2013, as predicted by the association, which said sales would stagnate throughout last year and would contract this year.

Research published by KDB Daewoo Securities on Friday stated that while the firm was pessimistic, Otoparts could see significant growth following the automotive industry’s projected stagnation, and that high demand for LCGCs and a possible subsidized fuel price adjustment could benefit the company and help it maintain its sales this year. (Anggi M. Lubis)