Indonesia sales rebound in March after tax cuts

Indonesia's new vehicle market expanded by over 10% to 84,910 units in March 2021 from 76,800 units a year earlier, according to member wholesale data compiled by industry association Gaikindo.

March 2020 was the first month to be impacted by social and business lockdowns imposed by the government to help slow the initial spread of the COVID-19 virus, resulting in vehicle sales plunging in the second half of that month. 

The vehicle market last month was lifted by a three month suspension of the luxury tax on local passenger vehicles with engines smaller than 1500cc, between March and May, as the government wanted to kick start the domestic economy.

The government said it will reintroduce 50% of the luxury tax in the following three months, between June and August, rising to 75% until the end of December.

The central bank also cut its benchmark interest rate to a new historic low of 3.50% in February to help stimulate domestic consumption.

Consumer and business confidence has improved since the arrival of the COVID-19 vaccines at the end of last year, with consumer spending beginning to recover from very depressed levels last year. GDP is estimated to have been flat at best in the first quarter of 2021, however, albeit with signs of recovery in March. 

Total vehicle sales in the first three months of 2021 were still down by 21% at 187,021 units from 236,825 units in the same period of last year, with passenger vehicle sales down by over 26% at 135,500 units while commercial vehicle sales declined by just over 3% to 51,521 units.

Toyota reported a sales decline of close to 24% to 57,435 units in the first quarter; followed by Daihatsu with an almost 27% fall to 35,175 units; Honda 25,393 units (-30%); Mitsubishi Motors 21,754 (-11%); and Suzuki 19,669 units (-19%).

Last month Gaikindo said it expects the vehicle market to rebound by 30% to 750,000 units this year.