Sales of new cars jump 41% in August on holiday fever

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Wed, 09/17/2008 10:32 AM  |  Business

Sales of new vehicles surged 41 percent in August as drivers rushed to buy cars for the Idul Fitri holiday while avoiding the upcoming spike in the vehicle ownership tax, an association says.

The Indonesian Automotive Industry Association (Gaikindo) announced Monday car sales this August reached 58,489 units, up from 41,470 last year.

During the first eight months of the year, car sales rose 48 percent to 411,984 units, up from 277,172 units in the same period last year.

Figures on new car sales are regularly used to gauge the purchasing power of the middle and upper-class.

The rise in August sales was mostly due to a heightened mood among those traveling before and after the Idul Fitri holidays, Gaikindo first chairman Jongkie D. Sugiarto told The Jakarta Post on Tuesday.

Indonesians often return to their hometowns to visit family and friends during the holidays.

The government's plan to raise the vehicle ownership tax on cars purchased next year also contributed to the buying frenzy, Jongkie added.

The government and House of Representatives have recently agreed to raise the vehicle ownership tax from 1.5 to 2 percent.

"The higher demand -- to which producers have responded by increasing production -- has led to more purchases," Jongkie said.

Gaikindo is optimistic car sales this year will reach its target of 570,000 units, up 31 percent from 434,473 units last year.

Car producers enjoyed their highest sales in July with 60,830 cars sold despite sluggish consumption of other goods, with many potential consumers spending money on school fees instead.

Due to brisk sales in the first half, Gaikindo decided to revise this year's target up -- to 570,000 units from 520,000 units -- even in the face of May's slight decline, which came on the heels of a government increase in fuel prices, up by an average of 28.7 percent.

PT Astra International, the country's largest vehicle assembler and distributor, said the higher demand for cars was mostly driven by areas outside Java, following a boom in mining and agriculture commodities.

Astra is the local principal holder of Toyota, Daihatsu, Isuzu, Nissan Diesel and Peugeot.

Astra secured the lion's share of the local automotive market with 50 percent of sales in August, followed by Mitsubishi (15 percent), Suzuki (11 percent) and Honda (10 percent).

Shares of Astra International rose to Rp 16,200 during Tuesday's trading, up from Rp 15,200 on Monday. The company's smaller rival, PT Indomobil Sukses International -- the holder of Suzuki, Volkswagen, Renault and Volvo in Indonesia -- remained unchanged at Rp 1,170.

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