The Association of Indonesian Automotive Manufacturers (Gaikindo) stated that car sales in August 2016 reached 96,294 units, up 6.3 percent from 90,537 units in August 2015.

The increase continued the positive trend since that began in April, moving further away from the weak conditions seen in the first three months of the year. Although sales decreased in July, that has been attributed to a seasonal slump.

Cumulative sales from January to August were at 690,808 units, up 2.9 percent from that of the same period last year. Growth in the eight month period flipped over the 19 percent drop in the January-August period in 2014.

Toyota Astra Motor (TAM) vice president director Henry Tanoto predicted the sales volume would be higher toward the end of this year. "We predict it will continue to grow close to 5 percent until the end of the year," he said as quoted by Bisnis Indonesia on Sept. 15.

Source: Gaikindo, Bareksa.com

Growing optimism

A more optimistic view came from Leonardo Henry Gavaza, an analyst at Bahana Securities. "In 2017, we expect car sales volume to reach 1.1 million units, up 7 percent year-on-year," he said in a research report released on Sept. 14.

The forecast was taken by considering several factors such as the higher purchasing power—thanks to lower interest rates, mild inflation and stronger rupiah—and increased infrastructure spending, helped by tax receipts from the government’s tax amnesty program.

The increasing sales volume may be a good signal for auto producers including Astra International (ASII) and Indomobil Sukses Internasional (IMAS), which are still under pressure in the first half of 2016.

During January to June 2016, Astra recorded Rp 88.2 trillion (US$6.7 billion) in revenue, down 5 percent from the previous year at Rp 92.5 trillion. Indomobil, meanwhile, suffered even more with a 15 percent revenue fall from Rp 9.3 trillion to Rp 8 trillion.

The lower revenues were due to weakening purchasing power. Despite a higher sales volume, automotive producers posted lower sales because customers preferred low cost "green" cars (LCGC), which were cheaper than other types of autos. (ags)

(Translated by and in collaboration with TheJakartaPost.com)