Indonesia’s new vehicle market fell by almost 10% to 49,453 units in May 2022 from 54,815 units a year earlier, according to member wholesale data compiled by industry association Gaikindo.

This first decline in over a year a reflected more than anything the annual Eid holidays which this year fell in early May. Month on month, the market was down by over 40% but was expected to rebound strongly in June. The market continued to benefit from low interest rates and from a broad range of new models released over the last year or so, while the country’s economy expanded by 5% year on year in the first quarter.

At the end of March, the government discontinued the luxury tax holiday on vehicles with engines up to 1,500cc and the tax discounts on vehicles with engines between 1,500cc-2,500cc, which were made available to support the market during the pandemic. A luxury tax discount of 66% on passenger vehicles costing up to IDR200m (US$13,660), comprising mostly Low-Cost Green Cars (LCGC), has been put in place instead for the second quarter, to be reduced to 33% in the third quarter.

Tax discounts have also been made available for passenger vehicles with engines up to 1,500cc and costing between IDR200m and IDR250m. The government is looking to incentivise vehicles based more on emissions levels, with electric vehicles enjoying full luxury tax holidays and hybrids also benefiting from significant tax discounts.

Total vehicle sales in the first five months of 2022 were up by 23.5% at 396,153 units from 320,749 units a year earlier, with passenger vehicle sales rising by just over 24% to 294,014 units while commercial vehicle sales increased by 22% to 102,139 units.

Toyota reported a sales rise of close to 24% to 122,170 in the first five months of the year, driven by the new popular Avanza compact MPV, the Raize small crossover vehicle and the new Rush compact SUV.

Daihatsu sales rose by almost 24% to 73,418 units, lifted by the Rocky small crossover vehicle, the new Terios compact SUV and the new Xenia, while Honda sales increased by 35% to 53,528 units, helped by the recent launch of the BR-V and Mobilio compact MPVs.

Mitsubishi five-month sales rose by over 13% to 46,596 units, thanks to its upgraded Xpander and Xpander Cross models, while Suzuki sales were just 3% higher at 34,198 units. The company launched the Ertiga hybrid this month to help lift sales.