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edans will likely enjoy growing popularity in the country as the growth in the economy will enable more people to purchase luxury vehicles, a senior car industry association official says.

Indonesian Automotive Industry Association (Gaikindo) deputy chairman Jongkie D. Sugiharto said that sales of sedan automobiles were rising even though most people here still prefer purchasing mini-multi purpose vehicle (MPV) to support more dynamic lifestyles.

Jongkie said that the popularity of sedans would rise in correlation with the growing middle class thanks to the country’s steady economic growth.

He predicted that stronger economic growth over the next five years would lead to a shift in buyers’ purchasing attitudes as more people become able to buy cars priced above Rp 200 million (US$22,168).

“People can afford to buy more expensive cars, including sedans,” he told The Jakarta Post.

Jongkie praised the government’s decision to lower the import duty for completely-built sedans from 50 percent last year to 40 percent this year, saying that such a policy would boost buyers’ appetites for the type of car. “If the government lowers the luxury tax for sedans, we’ll see even higher buyer enthusiasm for having sedans as their priority car,” he said.

Although sedans are expected to become more popular, Gaikindo believes that MPVs would continue to dominate the market.

“Sedan sales will grow in line with growth in the country’s total car sales,” he said. Jongkie predicted, however, that the growth in sales of sedans would not be as high as that of mini-MPVs because the government still applied higher taxes for sedans.

According to Gaikindo data, the government applies a 30 percent luxury sales tax for sedans with engine capacity of 1,500 cc and below, 40 percent for capacity of between 1,500 cc and 2,500 cc and 75 percent for above 2,500 cc.

In addition to the import duty and luxury sales tax, car buyers are also required to pay an automobile ownership tax. For example, the Jakarta administration has imposed an ownership tax of between 1 and 2 percent of vehicle value for a first car and between 2 and 10 percent for other cars.

Sedan sales experienced a boom in 2005, recording total sales of 35,369 units. Sedan sales slumped by more than 50 percent in 2006 to only 17,565 units, but rebounded to 27,381 in 2007. Sedan sales approached record highs with 34,300 units sold in 2008, but the global economic downturn forced the number down to 22,100 in 2009.

Sales regained momentum last year, recording 33,128 unit sales, representing 4.3 percent of Indonesia’s total car sales of 764,710 units.

Gaikindo estimates that overall domestic car sales may grow by 11 percent this year to exceed 850,000 units.

Research and consulting firm Frost & Sullivan predicts that MPVs would maintain dominance in the domestic automobile market in 2011. Models expected to lead the market were the Toyota Avanza, the Daihatsu Xenia, the Toyota Innova, the Nissan Livina and the Honda Jazz, the firm said. The firm also forecasts that compact and low-cost cars would be more successful this year because buyers in big cities prefer smaller and more fuel-efficient cars to deal with traffic congestion.

Compact and low-cost cars expected to garner positive results are the Suzuki Splash, the Nissan March, the Mazda 2 Hatchback and the Ford Fiesta, Frost & Sullivan reports for its 2011 automobile industry outlook.