The Indonesian new vehicle market in August surged to its highest level in two years, as consumers continued to return to the fold in response to falling interest rates.

The economy is growing at over 6% annually at present, with consumer spending picking up speed and helping to underpin the recovery that has mostly been led by the construction and infrastructure sectors.

August sales totalled 41,470 units, according to data released by Toyota Motor Indonesia, a rise of 48% compared with the 28,066 units sold a year earlier. In the first eight months of 2007, sales reached 277,188 units - almost 39% higher than the 199,591 units sold a year previously.
 
August's result was the best for the month since the Bank of Indonesia hiked interest rates sharply in mid-2005 as it prepared the economy for a sharp reduction in fuel subsidies - which saw fuel prices double overnight in October 2005. August sales also benefited from the annual Jakarta motor show in July, with new model launches and special deals raising buyers' interest.

Toyota's share of sales dropped to 32.5% during the month from 36.2% a year earlier, as demand for smaller, more fuel-efficient vehicles lifted demand for Suzuki and Daihatsu products.

The launch of the Captiva SUV - in July - was a major boost for General Motors Indonesia which has seen its volume dwindle following the withdrawal of several models, including its mainstay Chevrolet Blazer SUV.

Mercedes-Benz began selling here in July.

Tony Pugliese