The new vehicle market in Indonesia expanded for the first time in two years in April, by 3.8% to 84,700 units from 81,600 units a year earlier, according to data released by the industry automotive Gaikindo.

Economic growth in the country remains sluggish, however, with GDP growth coming in below 5% in the first quarter reflecting weak exports and lacklustre domestic consumption.

Honda continued to enjoy strong growth thanks to new models such as the BRV and the continued popularity of its Mobilio and HRV models.

In the first four months of the year the market was still down, however, by 3.3% at 351,900 units compared with 363,900 units a year earlier.

The industry remains optimistic that a gradual recovery will take place this year, as lower interest rates and rising investment helps lift economic activity. Cuts in fuel retail prices, low commodity prices and a stable currency have helped reduce price inflation in the last few months. This allowed Bank Indonesia to cut its benchmark interest rate three times since the beginning of the year, to 6.75%, which should help stimulate domestic consumption.

Gaikindo expects the vehicle market to grow by between 5-10% this year to 1.05-1.10m units.