Astra Group controls automotive credit financing business.
The expansion of automotive industry in the country is partly thanks to the role of multi-finance industry that provides motor vehicle credits (KKB) and car ownership credits (KPM). Brand holding sole agents (ATPM) said 80%-90% of the purchases of motor vehicles are financed with credits.
Strong demands for motor vehicles provide large market for credits by financing companies.
Seeing the potential business in financing business in the motor vehicle sector, have prompted ATPMs to established their financing subsidiaries to facilitate the sales of their products.
Astra Group, which is the largest ATPM in the country has a financing division called Astra Financial Service. Under the division, the Astra Group has established banking business and non bank financing business. The group has a number of subsidiaries operating in financing business offering credit for the purchases of cars and motorcycles as well as heavy equipment. Operating in the motorcycle sector is Federal International Finance (FIF) and in car sector is ACC (Astra Credit Company). In 2006, the group in cooperation with Toyota Financial Service Corporation from Japan established a joint ventire financing company Toyota Astra Financial Service (TA Finance).
The Astra Group teamed up with Standard Chartered Bank in a consortium to acquire Bank Permata. Bank Permata is directed toward supporting financing of credits for the purchases of automotive products, directly or through multi-finance companies.
Federal International Finance
Federal International Finance (FIF) was established in 1989 with the name of PT. Mitrapusaka Artha Finance. In 1991, the name was changed with PT. Federal International Finance (FIF). After being increased several times, in 2006, FIF now had a capital of Rp300 billion. PT. Astra International Tbk of the Astra Group owns 99.9% of FIF and PT. Arya Kharisma owns 0.1%.
FIF operates in financing business offering credits for the purchases of Honda motorcycles, which are produced by PT. Astra Honda Motor, also subsidiary of the company group.
FIF offers a 1 to 4 year credit for individual clients with an annual interest rate of 15%-17%. The credit term is 5 years for corporate clients or collective buyers.
FIF also offers credit for the purchases of electronic products through FIF Spektra and sharia financing through FIF Syariah. FIF receives financial support from Bank Permata.
In 1996, FIF began to focus more on financing Honda motorcycle credits. Currently FUF has 276 outlets and 109 marketing offices in more than 150 cities in Indonesia. Now it has more than 2.6 million clients all over the country.
FIF has succeeded in expanding itself to become a market leader in motorcycle credits. FIF has a 57% share of the motorcycle credit market.
FIF's record performance was in 2005 when it financing credit reached Rp 14 trillion. In the following two years the value fell to Rp 10.2 trillion in 2007 as a result of a decline in the sales of motorcycles in the country in 2006.
Table--1 Financing credits for new clients, 2003-2007 Year Value of new Number of new credits financing contracts (Rp trillion) (000) 2003 4.7 516 2004 7.9 844 2005 14.0 1,403 2006 11.6 1,206 2007 10.2 1,026 Source: FIF
FIF has also provided quite large credits to finance the purchase of second hand motorcycles. Sales of second hand motorcycles facilitated with credits by FIF totaled 432,000 units in 2007.
FIF provided credits for the purchases of 285,000 units of electronic products such as TV sets, washing machines, refrigerators and AC through FIF Spektra in 2007.
Table--2 Financing credits provided by PT FIFI by types of products, 2003-2007 Year Cub Sports Used Electronic motorcycles motorcycles motorcycles 2003 805 55 15 -- 2004 1,153 71 94 -- 2005 1,765 87 269 -- 2006 2,089 92 382 -- 2007 1,874 83 432 285 Source: FIF
In 2008, FIF plans to issue its 8th bonds valued at Rp 1 trillion in May. It will be part of bonds with a total value of Rp 2 trillion it plans to issue this year. The fund will be used to strengthen its financing capacity.
This year FIF hopes to provide new credits for the purchases of motorcycle amounting to Rp 12.5 trillion up from Rp 10.8 trillion last year.
FIF's sources of fund include bonds, off shore investment and equity accounting for 40%. Joint financing with banks account for 60% such as with, Bank Permata, Bank Mega, BNI, Bank Niaga, NISP, Bank Commonwealth, Citibank, GE Finance, Bank Syariah Mandiri (BSM), Bank Syariah Mega Indonesia and Bank Lippo.
Around Rp 10 trillion of the financing credits will be for the purchases of new motorcycles and Rp 2.5 trillion to finance credits for second hand motorcycles and electronic products. This year FIF target to provide financing credits for 1 million units of motorcycles.
The 8th bond valued at Rp 1 trillion to be issued In April 2008 will consists of 4 series--A series valued at Rp 300 billion maturing in 2009, B series Rp 150 billion maturing in 2010, and C series Rp 300 billion maturing in 2011 and D series Rp 250 billion maturing in 2012. FIF has named PT Kresna Graha Sekurindo, Mandiri Sekuritas, and Indo Premier Securities as the underwriters.
The assets of FIF were valued at Rp 9.1 trillion by the end of 2007, down from Rp 10.5 trillion a year before because of a decline in outstanding credits. FIF was more selective in offering credits.
A decline was also recorded in income from Rp 4.4 trillion to Rp 4.3 trillion because of smaller new credits extended in 2007.
However, its net profit rose from Rp 340 billion to Rp 410 billion on a decline in cost of fund.
Table--3 Financial Highlights of PT. Federal International Finance (in Rp million) Description 2006 2007 (31st Dec) (31st Sep) ASSETS a. Current Assets 9,621,867 8,101,090 b. Non Current Assets 866,418 958,008 Total Assets 10,488,285 9,059,098 LIABILITIES a. Current Liabilities 7,034,706 5,410,687 b. Non Current Liability 1,784,801 1,717,276 c. Minority interest -- d. Equity 1,668,778 1,931,135 Total Liabilities + Equity 10,488,285 9,059,098 REVENUES a. Revenue 4,442,801 4,298,230 b. Net Profit 340,897 410,176 Source: FIF
Astra Credit Company (ACC)
Astra Credit Company offers credits only for the purchases of cars. ACC is a trading name of holding company PT. Astra Sedaya Finance (ASF), which has three subsidiaries--Astra Auto Finance, Astra Multi Finance and Staco Mitra Sedaya Finance. ACC is fully supported by PT. Astra International Tbk the holding company for Astra Group and GE Capital.
Astra Sedaya Finance (ASF) was established in 1982 with the name of PT. Rahardja Sedaya. After being taken over by Astra International, its name was changed in 1992 to Astra Sedaya Finance. It is 44.28% owned by Astra, 47% by PT General Electric Services and 8.72% by PT Sedaya Multi Investama. ASF becomes a holding company for a number of subsidiaries--Astra Auto Finance, Estetika Sedaya Finance, Stacomitra Sedaya Finance and Swadharma Bhakti Sedaya Finance.
Products and services
In the beginning ACC offered credits only for the purchases of new and second hand cars produced by the Astra group including Toyota, Daihatsu, Isuzu and Nissan Diesel, but later it also provided credits for the purchases of non Astra products such as Jaguar, Audi, Daewoo, Chevrolet, Ford, Honda, KIA, Land Rover, Mitsubishi, Volvo, VW, etc.
Apart from cars, ACC offers credits to the purchases of Yamaha, Suzuki and Kawasaki motorcycles. Credit facility for Astra motorcycle product of Honda is provided by FIF, a subsidiary of the Astra Group.
Products and service offered by ACC include:
* Insurance for vehicles
* Protection against accidents
* ACC Credit Protection
* ACC Family Protection Plus
* ACC Health Protection Plus
* ACC Bill Protection Plus
* ACC Gold MasterCard
* Securing STNK and BBN
ACC Card is issued by ACC in cooperation with PT GE Finance Indonesia. ACC Card holders are exempted from membership fee in the first year. Installment is changed with low interest of 0.999%, and can draw cash up with a .12% interest rate, free airport lounge for two persons, price discount in certain stores.
ACC also issued ACC Guard Plus, which is insurance protection for vehicles. With a premium of 0.75% of the amount of monthly claims clients will benefit from personal protection and goods protection.
ACC Protection is a insurance protection. ACC will write off the remaining car credits in the event that the clients die from accidents. The heirs will not be required to pay the remaining credits. For this facility ACC cooperates with PT Asuransi Cigna.
ACC has continued to expand market not yet tapped by other companies or banks such as Customer to Customer Financing, which is a financing facility of ACC to help in the purchase of second hand cars with credits by individuals. ACC has simplified the process of credit approval cutting the time needed from 8 hours to four hours at present.
Until now ACC has built 36 branch offices in 26 cities and established cooperation with 2,000 dealers all over Indonesia. ACC has succeeded in listing more than 600,000 clients. It has 6,000 payment points to facilitate its clients.
ACC has established cooperation with a number of banks including BCA and Bank Permata to facilitate payments of installments. Payments could be through the ATM of BCA, Bank Permata, telephone banking, Flexi-Tel Bank Permata, Klik BCA and internet.
Financing Credit for Automotive Products
In the first four months of 2007, the number of vehicles purchased with credit from ACC totaled 28,237 units including 14,442 units of brand new cars and 13,795 units of second hands cars. Currently, ACC controls 65% of the car credit market in the country.
Table--4 Number of cars purchased with credits from ACC and types, 2007 Brand new cars Used cars January 2007 3,606 3,632 February 2007 3,357 3,241 March 2007 3,741 3,540 April 2007 3,738 3,372 Total Jan--Apr 2007 14,442 13,795 Source: Astra International Tbk
In 2007, ACC provided vehicle financing credits of Rp 9.8 trillion. In 2008 the amount is projected at Rp 12.5 trillion. ACC President Benny Tjoeng said the target could be exceeded given the high record of performance the first two months of this year. In January and February, ACC already extended credits amounting to Rp 2 trillion. During that period cars sales in the country reached 40,000 units per month.
ACC provides credits for vehicles including 65% in brand new vehicles and 35% in second hand vehicles. The brand new vehicles include heavy equipment for mining, agro, transport and logistics industries making up 15%. ACC plans to increase the portion of services for second hand cars to 40%. Most of 85% of the second hand cars are made up of Astra products--Toyota, Daihatsu, and Isuzu --and the rest non Astra products such as Mitsubishi, Honda, Suzuki, Nissan, and Mercedes.
Source of funds
In 2007, received loans from a syndicate of BNP Paribas, Citibank, and Sumitomo Mitsui Banking Corporation (SMBC) amounting to US$ 60 million.
In 2008, the financing target is set at Rp 12.5 trillion or an increase of 25%. In order to reach the target ASF is seeking loan of US$ 100 million from foreign bank syndicate. It hopes to secure and receive the loan in June 2008. A number of banks already pledges loans such as Hong Kong and Shanghai Banking Corporation (HSBC), Standard Chartered, and Bank of Tokyo-Mitsubishi UFJ (BTMU).
ACC also has received loans from local banks making up 20% of its total loan amount in January. It will issue bonds in six series totaling Rp 1 trillion carrying an annual coupon rate of 9.075%-10.3%.
In 2007, the assets of ASF fell to Rp 7.4 trillion from Rp 8 trillion in 2006 on a decline of claims in financing credits. The company is more selective in offering credit service.
Its income also fell to Rp 1.3 trillion from Rp 1.9 trillion, but its net profit rose to Rp 249 billion from Rp 210 billion in the same period. The increase in profit was as a result of smaller non performing loans and a rise in market value.
Table--5 PT. Astra Sedaya Finance (in Rp million) Description 2006 2007 (31st Dec) (31st Oct) ASSETS a. Current Assets 7,178,857 6,446,058 b. Non Current Assets 849,220 980,542 Total Assets 8,028,077 7,428,600 LIABILITIES a. Current Liabilities 4,563,438 3,827,922 b. Non Current Liability 2,242,543 2,257,319 c. Minority interest d. Equity 1,222,096 1,343,359 Total Liabilities + Equity 8,028,077 7,428,600 REVENUES a. Revenue 1,968,388 1,365,399 b. Net Profit 210,705 249,681 Source: ASF
Toyota Astra Financial Service
PT. Toyota Astra Financial Services (TA Finance) was established in 2005 as a joint venture company between Astra International Tbk and Toyota Financial Service Corporation (TFSC) with a share ratio of 50%:50%.
TFSC is a subsidiary of Toyota Motor Corp. TA Finance constitutes the 31st units of TFSC in 13 countries in the world. TA Finance started operation in 2006 offering credits for the purchases of Toyota cars. Its offers services in the form of consumer finance for the purchases of non commercial cars by individual clients, consumer finance for the purchases of commercial cars by corporate clients, and leasing credits for the purchases of vehicles in large number.
TA Finance utilizes the service of Auto 2000 (Toyota dealer), which has wide networks to promote its sales. Until now TA Finance has 7 branches to serve its 5,927 clients. TA Finance will handle the credit financing of 50% of the purchases of Toyota consisting of non commercial segment making up 80% and commercial segment making up 20%.
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|Title Annotation:||COMPANY PROFILE|
|Publication:||Indonesian Commercial Newsletter|
|Article Type:||Company overview|
|Date:||Mar 1, 2008|
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