(The Insider Stories) – Indonesian automotive financing  firms – known locally as multifinance companies – expect to ride out tough macroeconomic conditions and continue competing for a share of a redhot auto financing market despite the possibility the government will raise fuel prices by more than half, adding to inflationary pressure and a rupiah that has slumped to IDR9,700 against the U.S. dollar.

Foreign players are rumored to be seeking to enter the multifinance market, but they will find the competition stiff as the local firms that dominate are seeking to offer more benefits to customers and are expecting to take advantage of strong demand for Indonesian debt to finance business expansion using bond issuances.

The following are some perspectives from officials at PT Toyota Astra Financial Services, a financing joint venture between Toyota Financial Services Corp. and PT Astra International (ASII), Indonesia’s biggest automotive distributor which also owns several financing units, at a public event held by the company.

Buntoro Muljono, president director at TA Finance

On the outlook for the market amid tougher economic conditions:

The financing business is still robust despite the macroeconomic conditions because of strong growth in automotive sales, although to maintain growth multifinance companies will have to use sales strategies like offering bonuses to customers. “We will give attractive packages to customers to keep sales high.”

If the government decides to raise fuel prices by up to 56% to as high as IDR7,000/liter to reduce the pressure on the budget from fuel subsidies:

“The impact [on headline inflation] is usually felt a year after the announcement, and the market falls for a bit.”

With more foreign companies rumored to be seeking to join existing players like Toyota and Mitsui & Co. (MITSY, 8031), the majority owner of PT Bussan Finance:

“Competition is fairly tough but [local providers] still have good market share. Newcomers are going to find it hard to be quickly embraced [by customers] and [provide] good service.”

On issuing bonds to fund business expansion:

The group plans to offer fixed-rate rupiah-denominated bonds worth up to IDR1.2 trillion ($120 million) with tenors of one, three and four years. Indicative Indicative coupon rates are 6.25%-7.25% for the one-year bond and 7.25%-8.25% for the longer tenors. Underwriters will be PT HSBC Securities Indonesia, PT Indo Premier Securities, PT Mandiri Sekuritas and PT Trimegah Securities. Bookbuilding April 16-30, offering May 13-14, allotment May 15 and listing May 20.

Kurnadi Tandudjaja, director at TA Finance

On 2012 financial performance:

Loan growth was 28.79% with loans extended for 54,777 vehicles compared with 48,343 vehicles in 2011. Market share fell to 13.7% from 15.4%. This year targeting increase of 20% in number of loans translating to a rise in loan value to IDR11 trillion from IDR8.2 trillion, while market share may increase to 14%-15%.

The company plans to open new branches in Depok, Banjarmasin and Balikpapan.