New vehicle sales in Indonesia continued to recover in July, with sales rising by close to 13% to 62,600 units, according to data compiled by the local industry association Gaikindo.

After declining in the first quarter, the vehicle market has expanded in each of the last four months - bringing the cumulative seven-month total to 594,500 units – up 5.9% on the same period of last year.

There is rising optimism among domestic automakers that the market recovery will continue, after the Indonesian central bank cut interest rates earlier in the year and following some key new model launches at the Gaikindo Indonesian International Auto Show.

Overall growth in economic activity accelerated in the second quarter to an annualised 5.2%, from 4.9% in the first quarter, driven by stronger private consumption and government spending. 

The recent upturn in sales has been driven by rising demand for passenger vehicle sales with the compact MPV segment leading the recovery helped by new models from Toyota, Daihatsu and Honda.

The commercial vehicle market remained weak over the seven-month period with most weight categories posting double-digit declines.