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Car sales dip 7% in April despite expanded tax cut
In March, car sales surged 70 percent from the previous month to 84,915 units after the government implemented the first tax cut for cars with engine capacities under 1,500 cc.
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Waiting game: Vehicles move slowly along the Bogor-Jakarta toll road on Monday. The sudden influx of vehicles into Jakarta was a result of the Jakarta administration’s decision to let a number of public sectors resume activities following the central government's imposition of “new normal” policies in response to the prolonged COVID-19 pandemic. (JP/PJ.Leo)
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omestic car sales dipped in April but still hovered above industry expectations as negative first-quarter household spending countered a car tax incentive introduced that month.
Sales dipped 7 percent month-on-month (mtm) to 78,908 vehicles in April, a figure above the industry’s expected 70,000 units, after the Finance Ministry introduced a luxury tax (PPnBM) cut for cars with engine capacities between 1,500 cc and 2,500 cc, according to Indonesian Car Producers Association (Gaikindo) data.
However, the April sales figure also marks a 903 percent growth from the same month last year, a huge improvement compared to sales during the peak COVID-19 year.
“Based on the year-on-year sales trend, what is happening is still growth. However, this is just a deceleration of the growth,” Center of Reform on Economics (CORE) Indonesia research director Piter Abdullah said in an interview on Wednesday.
“In March, we may have seen the peak effects of the PPnBM tax cuts as the policy had just been implemented. So, we might need to wait for the overall trend in the months ahead.”
In March, car sales surged 70 percent mtm to 84,915 units after the government implemented the first PPnBM tax cut for cars with engine capacities under 1,500 cc.
The low car sales were recorded in the same quarter as when Indonesia’s household spending contracted 2.23 percent year-on-year, Statistics Indonesia (BPS) data shows, which countered the luxury tax cut meant to spur spending and revive the domestic automobile industry.
