JAKARTA: The soaring cost of production and rupiah exchange rate against the US dollar prompt domestic car tire makers to bolster domestic sales to reduce dependence on exports.
General Manager Marketing of Gajah Tunggal (GT) Arijanto Notorahadjo said the government would bolster domestic sales next year to anticipate weaker exports. "If car sales in developed countries don't rebound, the export market will decline, thus, leading to an increase in the domestic market," he told Bisnis recently. Domestic and export sales last year represented 29% and 71% of the total sales, respectively. The figures this year are estimated to hover at the range. The total tire volume exported by members of the Indonesian Tire Producers Association (APBI) during January-November 2010 surged 27.8% to 32.10 million units, representing 70.98% of the total car tire sales volume of 45.22 million units. In the meantime, domestic car tire sales volume, in the original equipment (OE) as well as the replacement segments during the period reached 13.12 million units (29%). Head of Investor Relation of Multistrada Even Go said the domestic market could not yet match the export market. "The domestic market is actually potential, but nothing compared to exports." The domestic sales volume of Multistrada, not a member of the APBI, only represents 26% of the total sales recorded by the tire maker. The volatile rubber price and other cost of production, added Arijanto, required tire makers to strike a balance between production and sales to reduce the impacts of soaring cost of production on earnings. The members of APBI as of November this year found their production rising 28.9% this year, up from 28.7% last year. Tire makers use a blend of natural rubber and synthetic rubber in their production. Last week, natural rubber price hit its record high of US$4,889 per ton. (11/wiw)
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