Saint-Gobain Group has delayed plans to build an automotive glass production plant in Indonesia as national car sales are forecast to hit a three-year low due to the current economic slowdown.
Saint-Gobain CEO Pierre-André de Chalendar said in a recent press briefing that his company had decided to hold back its investment until the four-wheeler car and truck market started to recover. “There has been a significant drop in automotive production this year, so we will delay [building the plant] a little bit. We’re not going to do it this year, we’ll do it once the market recovers,” he said.
Indonesia’s car sales fell by 15.5 percent to 671,679 units for the January-August period this year from 794,775 units in the same period of last year, mainly driven by weaker consumer purchasing power. According to data from the Association of Indonesian Automotive Manufacturers (Gaikindo), Indonesia’s national auto sales are forecast to reach less than 1 million units this year, the lowest in the past past three years.
Southeast Asia’s automotive sales fell by almost 15 percent to 1.6 million units in the first half of this year, with major markets like Indonesia, Malaysia and Thailand recording a downturn in sales.
Saint-Gobain is ready to start building the auto glass plant anytime after the market improved, said Mr Chalendar, as the company has already invested around US$22.4 million for land near its US$45 million-gypsum plant in the Cikande industrial estate, Banten.
Saint-Gobain had planned to partner with Japanese firm Central Glass Co. Ltd. to operate the auto glass plant, Chalendar said.
Saint-Gobain’s Indonesian automotive glass plant, once established, would be the company’s second in Southeast Asia. The plant is set to help the firm fulfil demand for car glass from global car manufacturers for various markets across Asia.
While expectations for the Indonesian market remained high, Chalendar said that his firm hoped for better stability in regulations and improved infrastructure.
Saint-Gobain’s business in Indonesia currently accounted for only 0.2 percent of its 41 billion global business. Its business size in the country, however, has grown rapidly from 15 million euros five years ago to a projected 100 million at present.
Europe has become the company’s largest market, accounting for 65 percent of its sales, with the Americas and Asia making up the remaining 15 percent and 20 percent, respectively.