New vehicle sales in Indonesia rose by 5.7% to 86,817 units in March, compared with 82,163 units a year earlier, according to data released by industry association Gaikindo.

Strong domestic economic growth continues to drive demand, combined with record low interbank interest rates of 5.75%.

First-quarter sales rose by 10.6% to 249,589 units, compared with 225,739 in the same period of 2011.

The market will likely remain strong in the second quarter, as manufacturers affected by the Thai floods work through order backlogs.

The government’s decision to introduce minimum downpayment requirements on car loans in June could also lift sales in the next few months.

The government’s decision to postpone fuel price increases might equally provide confidence to car-buyers.