New vehicle sales in Indonesia continued to recover in August, with sales rising by 6.4% to 96,300 units from 90,500 a year earlier, according to data compiled by the local industry association Gaikindo.
After declining in the first quarter, the vehicle market has staged a significant recovery in the last five months, resulting in cumulative eight month sales rising by 2.9% to 691,000 units from 671,600 units a year earlier.
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Economic growth accelerated to 5.2% in the second quarter, from 4.9% in the first quarter, driven by stronger private consumption and government spending. While government expects this level of growth to continue in the second half of the year, some economists think growth could slip back as government budgets come under pressure from weak tax revenues.
The automotive is cautiously optimistic that the market recovery will continue in the short term after the Indonesian central bank cut interest rates earlier in the year and following some key new model launches at last month's Gaikindo Indonesian International Auto Show.
The recent upturn in sales has been driven by rising demand for passenger vehicle sales, with the compact MPV segment leading the recovery helped by new models by Toyota, Daihatsu and Honda.
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