Indonesia Vehicle Tax Incentives

By administrator | September 22, 2020 | Finance.
Indonesia Vehicle Tax Incentives
Illustration: Indonesia Vehicle Tax Incentives

As well as Indonesia Vehicle Tax Incentives. The Ministry of Industry plans to relax the new car purchase tax of up to 0%. This proposal has been submitted to the Ministry of Finance. This tax relaxation is expected to be able to boost car sales again, which were sluggish during the Covid-19 pandemic.

The automotive industry has so many derivatives. There are a lot of Tier 1 and tier 2, so it needs to be paid attention so that people’s purchasing power increases. So that it can help the growth of the manufacturing industry in the automotive sector, said Industry Minister Agus Gumiwang last week.

He proposed that this relaxation be given until the end of this year. Not only the automotive industry, this discourse can provide fresh air for issuers engaged in car sales. Some of these listed companies include PT Astra International Tbk (ASII), PT Indomobil Sukses International Tbk (IMAS).

As well as PT Tunas Ridean Tbk (TURI), PT Mitra Pinasthika Mustika Tbk (MPMX), and PT Bintraco Dharma Tbk (CARS). Tunas Ridean Corporate Secretary Dewi Yunita assessed the possibility of this relaxation being able to boost sales of new cars during the Covid-19 pandemic. He said the TURI car sales trend tended to be better than at the beginning of the pandemic.

Vehicle Tax Incentives Relaxation

Indonesia Vehicle Tax Incentives
Illustration: Indonesia Vehicle Tax Incentives

MPMX General Manager Corporate Communication Natalia Lusnita assessed this relaxation indicates that the government is trying to help increase people’s purchasing power and seek to recover car sales which have continued to decline during the pandemic. The issuer’s performance has fallen throughout the first semester of this year.

The impact of the Covid-19 pandemic has hit their businesses. Car sales have fallen since last March. Even though it has gradually increased, the volume has not yet reached normal, like it was before the pandemic. Kiwoom Sekuritas Indonesia analyst Sukarno Alatas said this relaxation could be a positive sentiment.

And would definitely have an impact on increasing people’s purchasing power for vehicles. With the assumption, people who normally like to buy used cars have the potential to buy new cars. Because with this tax relaxation, the price comparison between new and used cars is not too far away.

With this condition, it is hoped that the demand for new cars will be much better. A tax reduction of up to 0% will make new car prices cheaper. The hope is that car sales can rise again and become a positive sentiment for automotive issuers. Moreover, stocks of automotive issuers are now considered cheap.

Vehicle Tax Incentives and Valuation

According to him, based on the valuation, the majority of automotive issuers are classified as discounted. This is seen from the PBV value (stock price compared to book value) in the span of five years, it has been below average, he said. Even so, this discourse is not necessarily able to boost automotive stocks.

Sukarno said investors will continue to see the conditions of economic development going forward. One of the concerns in this economic recovery is the development of the Covid-19 vaccine. If the development of this vaccine is successful, the pandemic has a chance to end and economic recovery can take place.

If these developments fall short of expectations, people would prefer to allocate their funds for health first rather than buying a car. In line with Sukarno, Director of Research and Investment for Pilarmas Investindo Sekuritas, Maximilianus Nico Demus, also doubted that the relaxation of the 0% tax could spur an increase in car sales.

In the midst of the current pandemic conditions, people are more concerned with saving money than spending. The relaxation policy is certainly a breath of fresh air for the industry. However, the question is the extent to which this relaxation can increase people’s purchasing power, he said.

Vehicle Tax Incentives amidst Car Sales

Sluggish Car Sales Due to the Covid-19 pandemic since last March, has made domestic car sales sluggish. Based on data from the Association of Indonesian Automotive Industries (Gaikindo), car sales in Indonesia fell by 90 percent in April from 76,811 units in March to 7,868 units.

In May, it fell by 55 percent to 3,551 units. Sales of new cars began to rise in June, reaching 12,623 units until August at 37,277 units. PT Astra International Tbk’s automotive business has plummeted this year. Total car sales fell by 45% during the first semester of 2020. Car sales in retail decreased by around 40.45%.

But if we look at the market share of Astra brands as of July, it has increased compared to last year, which was around 53%, said Astra Director Henry Tanoto during a public expose last August. Astra’s automotive business has decreased. Of Astra’s five businesses, automotive contributed up to 43 percent.

Of revenue in the first semester of last year. In the first semester of this year, the portion decreased to only 36 percent. Likewise, the automotive portion of the company’s profit fell from 35 percent to only 13%. PT Indomobil Sukses Internasional Tbk’s performance also fell due to the sluggish automotive business.

Last Year Vehicle Tax Incentives

Based on financial reports, sales of cars, trucks and heavy equipment were only Rp 2.86 trillion. Down 42.4% compared to the first semester last year which reached Rp 4, 97 trillion. The company’s total revenue fell 23% from the first semester of last year to 7.38 trillion. Indomobil also posted a net loss of up to Rp 347.4 billion from its net income.

The amount obtained in the same period last year was Rp. 462.6 billion. The car sales business is the largest contributor to Bintraco Dharma’s revenue. About 62.5 percent of the company’s revenue is contributed from this business. The rest comes from spare parts, operating leases, financing and after sales services.

The company’s car sales in July reached 767 units. This figure increased by 13.12% compared to the previous month. Meanwhile, sales in June increased 62% from the realization in May. Sluggish sales have made the company’s financial performance plummet in the first half of 2020. In the automotive segment.

Bintraco only posted revenues of Rp 1.69 trillion, down by 40% from the realization in the same period the previous year. The decline in revenue also occurred in the consumer financing business segment by 39.9 percent to Rp 307.05 billion and after sales business by 29 percent to Rp 241.31 billion.

Vehicle Tax Incentives and Bidbox

As a result, Bintraco has to bear a net loss of up to Rp 55.38 billion. In fact, the first semester of last year still posted a net profit of up to Rp 85.01 billion. This subsidiary of Sandiaga Uno’s company, PT Saratoga Investama Sedaya Tbk, has an online car sales business, namely Bidbox.

Based on the financial report, revenue from sales of motorbikes and cars and spare parts during the first semester of 2020 fell 33% compared to the same period last year, to IDR 4.9 trillion. In fact, this business contributed 88.7% of Mitra Pinasthika Mustika’s total revenue. This decrease caused the company’s total revenue to drop 31% to 5.5 trillion IDR.

The company also recorded a net loss in the first half of 2020 of up to 89.9 billion. Whereas in the first semester of last year, it still recorded a net profit of Rp 249.9 billion. Mitra Pinasthika Corporate Secretary Mustika Bernadeth Conny said the Covid-19 pandemic had an impact on companies.

Vehicle Tax Incentives Strategy

One of which was operational restrictions. Although there were no layoffs (PHK), the number of company employees during the first six months of this year has decreased by 410 people to 4,215 employees. Mitra Pinasthika has also prepared a strategy to maintain business continuity. One of the ways is the company to make efficiency.

To reduce operating costs in all business lines, said Bernadeth in an information disclosure on the Indonesia Stock Exchange, last August.

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