Jongkie Sugiarto, Chairman of the Indonesian Automotive Industry Association (Gaikindo), believes the slight increase in retail car sales is a sign that people's purchasing power has improved at the start of the year. Regarding the lower wholesales, he commented that it is a strategy to maintain healthy car stockpiles as these had been accumulating at the end of 2015 amid reduced demand for cars. Since 2013 Indonesian car sales have been declining due to weakened purchasing power amid the country's economic slowdown, high inflation (until late-2015) and high borrowing costs.

As Indonesia's economic expansion is expected to accelerate in 2016 (after six years of slowing economic growth), Sugiarto expects to see rising car sales in Southeast Asia's largest economy in 2016. However, the increase in car sales may be limited to below 5 percent (y/y) from 1.01 million sold vehicles last year.

In the first month of 2016 Toyota - as expected - remained the most popular vehicle in Indonesia. Total (retail) Toyota sales reached 25.382 units in January 2016, up 12.5 percent from 22,555 units in the same month last year. The dominant position of Toyota (and other Japanese brands) in Indonesia's automotive sector was the reason behind American car manufacturer Ford Motor Company's decision to close all its operations in Indonesia.

Indonesian Car Sales (CBU):

 Month    Sold Cars
   Sold Cars
   Sold Cars
   Sold Cars
   Sold Cars
 January      76,427      96,718     103,609      94,194      84,885
 February      86,486     103,278     111,824      88,740
 March      87,917      95,996     113,067      99,410
 April      87,144     102,257     106,124      81,600
 May      95,541      99,697      96,872      79,375
 June     101,746     104,268     110,614      82,172
 July     102,511     112,178      91,334      55,615
 August      76,445      77,964      96,652      90,537
 September     102,100     115,974     102,572      93,038
 October     106,754     112,039     105,222      88,408
 November     103,703     111,841      91,327      86,938
 December      89,456      97,706      78,802      73,264
 Total    1,116,230
   1,208,019    1,013,291

Source: Gaikindo

Motorcycle Sales in Indonesia

Meanwhile, motorcycle sales in Indonesia declined in January 2016. According to the latest data from the Indonesian Motorcycle Industry Association (AISI) motorcycle sales fell 17.2 percent (y/y) to 416,263 in the first month of 2016. Sigit Kumala, Head of the commercial department within the AISI, said motorcycle sales fell as local manufacturers curbed output amid a large amount of existing motorcycle stockpiles.

Kumala is optimistic that Indonesia's motorcycle sales will improve in 2016 on the back of improving purchasing power in Indonesia.