Indonesia’s automotive trade body has forecast that national vehicle sales should increase by at least 15% to more than 500,000 units this year.

Bambang Trisulo, the chairman of Gaikindo, told Reuters the fuel price hike would not hit the automotive industry as long as the central bank kept the key interest rate at no higher than 8.5% and inflation was below 10%.

“If those parameters are met I think we can still top 500,000 units this year. We totally support the plan. What is important for the government is to keep steady (fuel) supply and prevent any shortages,” Trisulo said.

Indonesia’s vehicle sales rose by 46% year-on-year in April to 51,500 units as interest rates declined further.

The Indonesian vehicle market continued to recover strongly in the first quarter, with deliveries to dealers rising by 60.2% to 135,387 units – making it the second-largest automotive market in the ASEAN after Thailand. Sales continued to be underpinned by strong domestic economic growth and benign interest rates of 8%.

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Toyota sold 45,058 vehicles during the quarter, for a market share of 33.2%, with the Avanza remaining its best-selling model with 16,158 sales – followed by the Kijang Innova with 14,033 units. Daihatsu sold a further 15,032 units and Hino 3,053 commercial vehicles, giving the Toyota group a market share of 46.6%.

Mitsubishi sold 19,878 vehicles during the quarter, with the Canter light commercial_vehicle range accounting for almost half its volumes. Suzuki followed closely with 18,706 sales, while Honda sold 12,789 units.

Indonesia has not been unaffected by rising energy and commodity prices and the government is widely expected to be forced into action in the second half of 2008. Inflation is expected to go into double-digit figures later in the year and interest are likely to be hiked to around 9%. Fuel subsidies are rising in response to higher oil prices and fuel price hikes also look increasingly likely later this year.