Honda sees 20% sales jump on Indonesian tax amnesty

Bloomberg

Indonesia’s tax amnesty could boost industrywide car sales in the country by a fifth as people spend their newly declared wealth on big-ticket items, according to the local unit of Honda Motor Co.
“The car ownership ratio in Indonesia is relatively low and there’s enough room for producers to sell more,” Jonfis Fandy, head of sales and marketing at PT Honda Prospect Motor, said in an interview Friday at the Gaikindo Indonesia International Motor Show. “If the tax amnesty program proves to be a success, we could see an increase of as much as 20 percent next year,” he said as people crowded around the latest models at the annual expo in Jakarta.
Indonesia’s central bank estimates the reprieve, which runs through March 2017, could lure as much as 560 trillion rupiah ($43 billion) of undeclared income back to the country from overseas.
If the amnesty lives up to those projections, it will lift economic growth and enable the government to continue with an ambitious infrastructure program. With a population of 256 million, Indonesia is Honda’s third-biggest overseas market after the U.S. and China.
Japan-based Honda, which is No. 2 in the Indonesian car market behind Toyota Motor Corp., posted 35 percent sales growth in the first half, official data show, compared with 1.2 percent expansion for the industry as a whole. Some of Honda’s fastest expansion is occurring in outlying areas of the archipelago, such as Sulawesi in eastern Indonesia, said Fandy. If the 20 percent growth
estimate comes to pass in 2017,
that would be the sharpest growth since 2012.
Total car sales will rise to 1.05 million units in 2016 from 1.01 million last year, Yohannes Nangoi, chairman of Indonesia’s automotive industry association, known as Gaikindo, told reporters on Aug. 11. PT Astra
International, which manufactures and distributes Toyota cars in Indonesia, recorded a 4.1 percent expansion in sales in the first half, Gaikindo figures show. Toyota controls 33 percent of the market, with Honda at 21 percent.
Astra International shares closed up 0.3 percent in Jakarta after being up as much as 1.3 percent earlier. Honda Motor fell 0.7 percent
in Tokyo, swinging from a 1 per
cent gain.
“The comeback of the Indonesian market is extremely good for Japanese automakers” struggling with a shrinking home market, said Koji Endo, a Tokyo-based analyst at SBI Securities Co. “Honda may benefit the most as it has a big share in the motorcycle market there and people tend to step up to vehicles of the same brand.”