Demand for subsidized fuel in Indonesia is expected to continue its growth, despite the recent price hike, because the country's economy is growing at a pace of at least six percent per year and more and more cars fill the streets of Indonesia (resulting in more pressure on the country's already fragile infrastructure). In 2012, Indonesian car sales reached a record high level of over 1.1 million units. Moreover, Gaikindo (the Indonesian Automotive Industry Association) expects a similar sales figure in 2013. In the first five months of 2013, car sales in Indonesia had already reached a total number of 497,670 vehicles, which represents a 14.8 percent growth compared to the first five months of 2012.

Indonesia's Car Sales 2013:

 Month     Sold Cars
 January        96,703
 February       103,267
 March        95,934
 April       102,198
 May        99,568
 Total       497,670

Source: Gaikindo

Concerns about stagnating car sales seem to be unfounded. Analysts initially expected that car sales in 2013 would decline due to the new minimum down payment rule in automotive Shariah-financing. This new down payment rule involves a required down payment of 25 percent of the car´s value. Previously, down payment requirements had not been set for Islamic financing companies. Moreover, the government raised the price of subsidized gasoline by 44 percent and diesel by 22 percent on 22 June 2013 in order to relieve the ballooning budget deficit. On previous occasions when the government raised the price of fuel (such as in 2005) car sales plummeted immediately afterwards. However, if sales will fall it will only be a temporary trend as Indonesia still has a low car per capita ratio, while per capita GDP is rising and interest rates are affordable. Sales growth is also estimated to be supported by the introduction of more 'low cost and green cars' on Indonesia´s market.

       2008      2009      2010      2011      2012
Indonesia's Car Sales
(number of car units)
   607,805    486,061    764,710    894,164   1,116,230

Source: Gaikindo