Boston, MA -- (SBWIRE) -- 11/15/2012 -- Despite the introduction of new regulations regarding minimum down payments on vehicle purchases in June 2012, Indonesia's total vehicle sales for July reached a record 103,219 units. If maintained for the remainder of the year, this pace would take sales beyond BMI's forecast for 9.8% growth, but we do believe sales will slow during the latter months of the year as seasonal factors are removed and so our forecast for 9.8% growth still stands.

According to the chairman of the Association of Indonesian Automotive Manufacturers (Gaikindo), Sudirman Maman Rusdi, sales have been buoyed by the timing of the Idul Fitri holiday period, which started in mid-August 2012. In that respect, we would expect to see any effects of the financing regulations taking effect from September's data onward. The first half of August should still benefit from some pre-holiday purchases and so total sales will begin to show a clearer picture of how the market has reacted to the rules in the last third of the year. Sales for the first seven months, however, have provided a strong start, with total sales up 26% year-on-year (y-o-y) to 638,264 units. July's record sales were 16% higher than July 2011 and 1.5% higher than the previous record for monthly sales, set in June 2011.

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Indeed, carmakers have been undeterred by the threat of the new financing regulations and continue to invest in the country. Japan's Mazda Motor has announced that Indonesia will play a pivotal role in its plan to sell 1.7mn units worldwide by 2016. Mazda President and CEO Takashi Yamanouchi said the country 'is increasingly becoming an important market for our strategic viewpoint', which aligns with BMI's positive view of Indonesia, where we expect average annual vehicle sales growth of 10% over our forecast period to 2016.

Moreover, BMI's view that Indonesia can become a leading South East Asian export hub along the lines of neighbouring Thailand has been backed by the H112 results of Toyota Motor Manufacturing Indonesia, which has almost doubled its exports. The main export destination for Toyota's output is the Middle East and in particular, markets of the Gulf Cooperation Council (GCC) where BMI expects demand to remain strong. Total production at the company's plant in Karawang was 79.25% higher yearon- year (y-o-y) in H112 at 79,161 units. Although domestic demand in Indonesia is still strong, with total vehicle sales in the country up 27.5% in the first half, Toyota's output growth was driven by exports, which rose 93.32% y-o-y to 29,651 units.

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