Indonesia’s new vehicle market increased 4% to 82,581 units in June 2023 from 79,168 units a year earlier, according to member wholesale data compiled by local automotive industry association Gaikindo.

The vehicle market returned to more stable growth in June following disruption from the annual Eid holidays in the previous two months. The economy continued to be driven by a rebound in domestic and international tourism despite multiple interest rate hikes by the central bank over the last two years, from 3.5% to 5.75%.

The World Bank last month said it expected full year GDP growth to moderate to 4.9% from 5.3% in 2022 as the rebound from the Covid pandemic continued to fade in the second half of the year.

Vehicle sales in the first half of 2023 expanded by 6.5% to 505,985 units after growing21% to 475,321 units a year earlier, helped by recent new model launches and as last year’s supply chain bottlenecks eased.

Sales of passenger vehicles rose 8% to 384,224 units while commercial vehicle sales were slightly higher at 121,761 units.

The Indonesian government cut the sales tax on battery electric vehicles (BEVs) to zero in May to help drive up demand and is also actively encouraging purchases by government departments. It is also looking to expand the country’s EV charging network to help achieve its target of 2m BEVs in circulation by 2030.

Toyota sales increased 7% to 160,276 units year to date (YTD) while Daihatsu sales were up 10% at 99,240 units, helped by the launch of the updated Ayla small car.

Honda recovery continued with sales rising by 19% to 74,694 units boosted by new models including the WR-V.

Suzuki sales were flat at 41,321 units, with performance improving since the launch of the new Ertiga in May, while Mitsubishi sales fell 23% to 39,291 units following strong growth last year.

Local vehicle production increased 5% to 696,845 units in the first half while exports of complete vehicles surged 25% to 248,004 units.