Indonesia’s new vehicle market expanded 9% to 79,168 units in June 2022 from 72,720 units a year earlier, according to industry association Gaikindo.

Sales last month rebounded from a 10% decline in May when showroom activity was slowed by the annual Eid holidays.

The market continued to benefit from low interest rates, and the broad range of new models released over the last two years, while the country’s economy expanded 5% year on year in the first quarter.

At the end of last March, the government ended the luxury tax holiday on vehicles with engines up to 1,500cc and tax discounts on vehicles with engines between 1,500cc-2,500cc which were put in place to prop up the market during the pandemic. For the second quarter, that 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), to be reduced to 33% in Q3. Smaller tax discounts are also available for passenger vehicles with engines up to 1,500cc 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 half of 2022 were up by 21% at 475,321 units from 393,469 units a year earlier with passenger vehicle sales rising 22% to 355,303 units while commercial vehicle sales increased 17% to 120,018 units.

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By GlobalData

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