Indonesia
strategy
Indonesia Motor Show 2012
Event
We attended the closing weekend (29 & 30 Sept) of the 20th Indonesian International Motor Show 2012. Below are some key takeaways:
Impact
Attendance and total transactions at a new high. According to local press, total number of visitors reached 320k by Saturday with the final tally likely to be above 360k, higher than 323k in 2011 and 282k in 2010. A total of 35 brand principals were represented in the 11-day event with total transactions reaching Rp4.4tn up to Saturday and likely exceeding Rp5.0tn including Sunday’s total. Hence, total transactions are likely to be up 56% y-o-y from Rp3.2tn in 2011.
Low-cost compact city cars attracting most attention. Crowds were visibly gathering around the latest low-cost compact city cars such as Toyota Agya and Daihatsu Ayla. Higher priced models such as Honda Brio, Suzuki Splash and Mitsubishi Mirage also got a lot of attention. However, we saw the most interest in Toyota Agya and Daihatsu Ayla with customers putting down Rp5m in booking fees to reserve a unit despite limited information (no brochure available) or definite pricing. According to one Toyota salesperson, the target for Agya is 200 units with January 2013 delivery, but due to the current strong demand (800 units as of mid-Saturday) customers will have to wait until the end of February or March 2013 for delivery.
Finance companies offering record low rates. Interest rates offered ranged from 3.28% p.a. for one year instalments to 5.58% for five years. Note, interest rates are calculated on a flat rate basis or equivalent to about double i.e. c7.0% p.a. (one year) for effective rate. BII Finance, a unit of Maybank-BII, was the most aggressive in its promotional campaign offering instant approval with six months zero interest for the first 5000 applicants. BII Finance also was also offering the lowest interest rate of 3.28% p.a. for one year. BCA and Panin Bank were two competitors offering attractive financing packages but, based on our interviews with various salespersons, Panin is often the preferred firm among the three. Brands available for financing included Toyota, Daihatsu, Honda, Nissan, Ford, Mazda and Kia.
Outlook
We remain optimistic on the outlook for the four-wheeler industry and the turnout from the 20th Indonesian International Motorshow 2012 seems to support our case. Low-cost compact city cars seem to be the focus of automakers targeting the mass market segment, playing on increasing affordability, and some upside from upgrades by motorcycle owners. In addition, financing options remain quite attractive, which should support
stronger sales volume. Our preferred stock in the auto sector is Astra International. For a detailed investment thesis on Astra, refer to our previous report Astra International – it is difficult to remain short quality on 6 Aug 2012 by our analyst Lyall Taylor.
source: Macquarie equity research dated 1 Oct 2012
Indonesia Motor Show 2012
Event
We attended the closing weekend (29 & 30 Sept) of the 20th Indonesian International Motor Show 2012. Below are some key takeaways:
Impact
Attendance and total transactions at a new high. According to local press, total number of visitors reached 320k by Saturday with the final tally likely to be above 360k, higher than 323k in 2011 and 282k in 2010. A total of 35 brand principals were represented in the 11-day event with total transactions reaching Rp4.4tn up to Saturday and likely exceeding Rp5.0tn including Sunday’s total. Hence, total transactions are likely to be up 56% y-o-y from Rp3.2tn in 2011.
Low-cost compact city cars attracting most attention. Crowds were visibly gathering around the latest low-cost compact city cars such as Toyota Agya and Daihatsu Ayla. Higher priced models such as Honda Brio, Suzuki Splash and Mitsubishi Mirage also got a lot of attention. However, we saw the most interest in Toyota Agya and Daihatsu Ayla with customers putting down Rp5m in booking fees to reserve a unit despite limited information (no brochure available) or definite pricing. According to one Toyota salesperson, the target for Agya is 200 units with January 2013 delivery, but due to the current strong demand (800 units as of mid-Saturday) customers will have to wait until the end of February or March 2013 for delivery.
Finance companies offering record low rates. Interest rates offered ranged from 3.28% p.a. for one year instalments to 5.58% for five years. Note, interest rates are calculated on a flat rate basis or equivalent to about double i.e. c7.0% p.a. (one year) for effective rate. BII Finance, a unit of Maybank-BII, was the most aggressive in its promotional campaign offering instant approval with six months zero interest for the first 5000 applicants. BII Finance also was also offering the lowest interest rate of 3.28% p.a. for one year. BCA and Panin Bank were two competitors offering attractive financing packages but, based on our interviews with various salespersons, Panin is often the preferred firm among the three. Brands available for financing included Toyota, Daihatsu, Honda, Nissan, Ford, Mazda and Kia.
Outlook
We remain optimistic on the outlook for the four-wheeler industry and the turnout from the 20th Indonesian International Motorshow 2012 seems to support our case. Low-cost compact city cars seem to be the focus of automakers targeting the mass market segment, playing on increasing affordability, and some upside from upgrades by motorcycle owners. In addition, financing options remain quite attractive, which should support
stronger sales volume. Our preferred stock in the auto sector is Astra International. For a detailed investment thesis on Astra, refer to our previous report Astra International – it is difficult to remain short quality on 6 Aug 2012 by our analyst Lyall Taylor.
source: Macquarie equity research dated 1 Oct 2012
