Car makers propose to increase LCGC selling price - Daily Pack 16 April 2014

Car manufacturers reportedly proposed to increase low-cost green cars (LCGC) selling price on the back of higher raw materials costs. Based on LCGC regulation, the government set the maximum price of LCGC at IDR95mn/unit (off-the-road). Ministry Industry said that looking at current economic condition, LCGC price is appropriately to be reviewed. This is to attract higher investment in national car manufacturing industry. (Bisnis Indonesia, Gaikindo)

Comment: We see that higher LCGC selling price should impact its sales, at the end it would impact domestic car sales growth. Domestic car sales reached 328,555 units in 1Q14, up 11% y-o-y, from 295,993 units in 1Q13. Notably, LCGC was the main drivers of 1Q14 domestic sales growth, while non-LCGC sales declined 3.9% y-o-y. According Gaikindo, LCGC – which was just launched in Sept-13 – was sold 43,999 units in 1Q14, accounted for around 13.3% of domestic sales. Toyota Agya is the most selling LCGC model with 20,631 units (46.9% of LCGC market shares), followed by Daihatsu Ayla’s 12,697 units (28.8%), Suzuki Karimun Wagon’s 5,888 units (13.4%), and Honda Brio Satya’s 4,783 units (10.9%). (Andrey Wijaya)

FROM TRADING DESK: JCI today is expected to be traded at 4,851.32 and 4,949.56

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Best regards,

RHB OSK Indonesia Research Institute