Indonesia’s new vehicle market surged to 54,815 units in May 2021 from extremely depressed year earlier sales of just 3,551 units, according to member wholesale data compiled by industry association Gaikindo.

May 2020 marked the low point for the country’s vehicle market when the economy came to a virtual standstill due to strict lockdown measures introduced by the government to help control the spread of the COVID-19 pandemic.

Vehicle sales plunged by 96% that month, after dropping by 90% in the previous month.

Vehicle demand in the country remains weak by pre-pandemic standards, however, despite the government suspending the luxury tax on local passenger vehicles with engines smaller than 1,500cc in March 2021 as it looked to kick-start the domestic economy.

Compared with the previous month, May sales fell by over 30% as the initial effects of the tax cut waned, although there were reports that vehicle output in the country was also affected by the global shortage of semiconductors.

Vehicle production fell by 32% to 63,636 units in May, with Daihatsu and Mitsubishi Motors posting the sharpest falls.

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The government said it would extend the 100% luxury tax discount until the end of August to provide additional support for the local vehicle industry.

Bank Indonesia kept its benchmark interest rate at a historic low of 3.50% at its May meeting to help stimulate domestic consumption. While a survey by the central bank showed a marked improvement in consumer confidence in April, recent data shows the number of COVID-19 infections has increased sharply since the end of May and this could lead to further social restrictions in the capital Jakarta and in surround cities.

Total vehicle sales in the first five months of 2021 increased by just over 29% to 320,749 units from 248,340 units in the same period of last year, with passenger vehicle sales up by close to 24% at 236,884 units while commercial vehicle sales bounced by 48% to 83,865 units.

Toyota reported a sales increase of close to 27% to 98,906 units year-to-date; followed by Daihatsu with a 20% rise to 59,346 units; Mitsubishi 41,144 (+57%); Honda 39,699 units (+6%); and Suzuki 33,110 units (+27%).