Indonesia’s new vehicle market surged by over 29% to 86,256 units in July 2022 from 66,639 units a year earlier, according to member wholesale data compiled by industry association Gaikindo.

The vehicle market last month continued to rebound from the 10% decline in May, when activity was held back by the annual Eid holidays, and also by improving supply chain backlogs. Economic growth was a better than expected 5.4% year-on-year in the second quarter, lifted by a return of domestic and international tourism after the government lifted travel restrictions earlier this year. Bank of Indonesia kept its benchmark interest rates unchanged at a historic low of 3.5% to help the economy recover from the pandemic.

At the end of March the government discontinued the luxury tax holiday on vehicles with engines up to 1500cc and tax discounts on vehicles with engines between 1500cc-2500cc, which were put in place to support the market during the pandemic. This was replaced by a luxury tax discount of 66% on passenger vehicles costing up to IDR200m (US$13,660), comprising mostly Low-Cost Green Cars (LCGC), in the second quarter – falling to 33% in the third quarter. Smaller tax discounts have also been made available for passenger vehicles with engines up to 1500cc and costing between IDR200m and IDR250m.

 The government is also looking to incentivise vehicles based 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 seven months of the year were up by 22% at 561,287 units from 460,105 units a year earlier, with passenger vehicle sales rising by almost 23% to 420,448 units while commercial vehicle sales increased by just over 20% to 140,839 units.

Toyota’s seven-month sales rose by 24% to 178,787 units, driven by the all-new popular Avanza compact MPV, the Raize small crossover vehicle and the new Rush compact SUV. Daihatsu’s sales rose by over 26% to 106,278 units, lifted by the Rocky small crossover vehicle and the new Terios compact SUV; while Honda’s sales also increased by 26% to 72,184 units, helped by the recent launch the new HR-V, BR-V and Mobilio models.

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Mitsubishi’s sales were slightly lower at 58,319 units year-to-date ahead of the launch of the upgraded Xpander Cross model, while Suzuki’s sales were flat at 48,880 units.