New vehicle sales in Indonesia plunged by almost 96% to 3,551 units in May 2020 from already weak year-earlier sales of 84,146 units, according to member wholesale data compiled by industry association Gaikindo, as the impact of the global COVID-19 pandemic on the economy continued to escalate.

The May sales decline followed a 90% drop in April with the second quarter of 2020 now expected to be the low point in the current market downturn.

In the first five months of the year, total vehicle sales fell by over 41% to 248,340 units from 422,038 units a year ago.

Major local vehicles manufacturers, including Toyota, Suzuki, Mitsubishi and Honda, were forced to suspend local production in April and May to control inventory as domestic retail demand and exports plunged.

Nissan announced the closure of its second Indonesia plant, choosing instead to rely on imports and product rebranding with Mitsubishi Motors.

The Indonesian government in early/mid-June began easing the almost three month long economic lockdown, with shopping malls, restaurants and independent shops now allowed to open to the public with heightened health precautions. 

Domestic travel is now allowed for business, for returning residents and for providers of essential services while international travel remains even more restricted.

All are required to produce a negative COVID-19 test result. This is having a devastating impact on the tourism-related industries.

The government has implemented a number of fiscal and poverty alleviation policies to help mitigate the effects of the pandemic while Bank Indonesia has cut its benchmark interest rate to 4.5% and lowered its reserve requirement for local banks to help provide additional liquidity to the economy.

It also indicated it will launch quantitative easing to fund economic growth through infrastructure investment. 

Sales of passenger vehicles fell by over 41% to 191,688 units in the five month period while commercial vehicle sales fell by just over 40% to 56,652 units.

Toyota reported a 42.5% decline in wholesale volume to 78,111 units year to date, followed by Daihatsu with a 39% drop to 49,443 units, Honda 37,502 (-27.2%); Mitsubishi Motors 26,165 (-50.3%) and Suzuki 26,031 units (-33.8%).

Djony Bunarto Tjondro, the newly appointed president director of Astra International, the country's largest vehicle distributor with more than 50% of total domestic sales, has seen the market begin to improve in June as the economy begins to open up.

He said "in June we've seen some pretty good movement, with volume increasing compared with May".