Astra Sees Indonesia’s Vehicle Sales Falling 5%-10% in 2015

Indonesia’s vehicle sales are expected to fall in 2015 for the second consecutive year as a global slowdown hurts Southeast Asia’s largest economy, the head of the country’s largest listed conglomerate said.

Domestic car sales are expected to fall by 5 percent to 10 percent from 1.2 million units in 2014, Prijono Sugiarto, President Director of PT Astra International, said on the sidelines of a World Economic Forum conference in Jakarta on Monday. The company got 54 percent of its revenue last year from its automotive business that distributes cars from Toyota Motor Corp. and Daihatsu Motor Co., according to Bloomberg calculations.

The sales outlook reflects the challenges President Joko Widodo will have in reviving economic growth that has weakened to the slowest in over five years. Astra, which also distributes heavy equipment made by Komatsu Ltd. and has palm oil plantations, is seen by fund managers as a bellwether for the economy.

“Hopefully we have reached the bottom of the declining trend,” Sugiarto said. “Indonesia is not immune to what happened in the global economy.”

Astra shares fell 3.5 percent to 7,700 rupiah in Jakarta on Monday to the lowest close since Feb. 10. PT Indomobil Sukses Internasional, the largest automotive distributor after Astra, dropped 3.7 percent to a four-month low.

“The remarks show the tough outlook for Astra as automotive remains the biggest contributor for the company,” said Akbar Syarief, a fund manager at PT MNC Asset Management in Jakarta. “Astra will continue its effort to diversify its business.”

The economy is expected to grow by 5.3 percent in 2015, according to a median estimate from economists surveyed by Bloomberg. Growth could reach above 5.4 percent if the government’s infrastructure budget can be spent quickly, said Mirza Adityaswara, the central bank’s senior deputy governor.

“I’m still optimistic about the medium to long term outlook of Indonesia,” Sugiarto said. “The government has done so many things that I think are right such as starting infrastructure projects.”

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