Vehicle sales in Indonesia rose by 15% year-on-year in June, according to preliminary data released by Toyota Motor Indonesia on the sidelines of the Jakarta Motor Show, writes Tony Pugliese.

This represents a sharp slowdown in annualized growth rate compared with earlier months, reflecting to some extent deteriorating economic conditions but mostly also as buyers looking forward to the annual motor show. The market in the first six months of the year reached a record 295,774 units - more than 30% higher than the 226,126 units sold in the same period last year.

Despite worsening economic fundamentals in the country, consumer interest in the vehicle market has remained strong throughout most of this year. But the recent fuel shortages, caused by declining stocks in the country as international oil prices continued to strengthen, a sharp decline in the Indonesian rupiah against the US dollar and rising inflation are likely to have had some effect on consumer confidence.

Toyota, which added the Thai-made Fortuner SUV to the line-up at the show, saw its share of the Indonesian market slip marginally to 30.8% in the first half of the year compared with 32.2% a year earlier. Its 25.9% volume growth, from 72,721 units to 91,555, proved insufficient to maintain its market position.

The company is optimistic nevertheless about its full-year outlook and expects to fully recover the lost ground in the second half of the year. The Fortuner plugs a gaping hole in the company's SUV line-up, which Nissan and Honda have exploited with the X-trail and CR-V models respectively.

Toyota has set itself a sales target of 500 units per month of the model. Sales of the Kijang Innova, launched last September, performed well with volumes rising by 32.9% to 43,092 units. Avanza sales rose by 34.5% to 26,456 units in the first half of 2005.

Daihatsu, Suzuki, Honda and Nissan al reported higher market shares in the first five months of 2005. Suzuki sold 42,561 vehicles, claiming 17.3% of the market; Daihatsu 24,330 (9.8%); Honda 24,782 (10.1%) and Nissan 6,069 (2.5%).

Johnny Darmawan, president director of Toyota Astra Motor - the local distributor, told local reporters that the company is focused on maintaining a market share of at least 30%. He reiterated his sales target for the year, of 163,000 units, despite the strong first half performance. Gaikindo's latest total market forecast is for 550,000 units this year.

Interest rates remain relatively low in historic terms and credit availability has improved significantly in recent years, which has increased purchasing power in the country. But economic developments in the last month, on the whole, have been negative - hence the rising caution in the marketplace.

Most of the vehicles making their Indonesian debuts at the Jakarta Motor Show were imports. BMW strengthened its presence at the lower end with the launch of the 1-series, though at more than Rp400m, it is likely to struggle. Mercedes-Benz launched the long-awaited M-series, with deliveries due to start in September. The Rolls Royce Phantom and the Bentley Flying Spur topped the list of crowd-pullers, while Jaguar launched the X-Type estate.

In the non-luxury segments, Ford launched the new Focus, which it imports from the Philippines, while Mazda launched the Mazda 3, based on the same model. Hyundai launched the 1.1L version of the Atoz, which takes over from the 1L model, and the Tucson SUV.

Tony Pugliese