The Indonesian automotive industry faced another challenging month as car sales continued to decline in June 2024. According to the latest data, vehicle sales fell by 11.8% year-on-year to 72,936 units, marking the 12th consecutive month of decline.

While this drop represents a slight improvement from the 13.3% decrease observed in May, it underscores the ongoing challenges in the Indonesian automotive sector. The prolonged downturn has significantly impacted the market, with cumulative sales for the first half of 2024 falling by 19.4% to 408,012 units compared to the same period last year.

Key factors contributing to the sales slump include:

1. High interest rates: The Indonesian central bank's benchmark interest rate remains at 6.25%, affecting vehicle financing and consumer purchasing power.

2. Economic uncertainty: The upcoming 2024 General Election and unstable purchasing power among some segments of the population have impacted consumer confidence.

3. Global economic pressures: The slowdown began in the third quarter of 2023 when the U.S. Federal Reserve started raising interest rates, prompting similar actions from Bank Indonesia.

Despite the overall market decline, some automakers managed to buck the trend:

• Toyota maintained its market leadership with a 2.7% increase in sales, reaching 25,464 units and capturing a 34.9% market share.

• Mitsubishi saw a significant 17.6% growth, selling 6,470 units and securing an 8.9% market share.

However, other major players experienced substantial declines:

• Daihatsu sales fell by 17.4% to 14,967 units.

• Honda suffered a sharp 34.1% decrease, selling 7,618 units.

• Suzuki experienced the steepest decline among top manufacturers, with sales plummeting 41.5% to 4,584 units.

Despite the current challenges, the Association of Indonesia Automotive Industries (GAIKINDO) remains optimistic about the market's recovery. The organization is maintaining its 2024 sales target of 1.1 million units, although it acknowledges that adjustments may be necessary.

GAIKINDO is pinning its hopes on the upcoming 2024 Gaikindo Indonesia International Auto Show (GIIAS) to stimulate sales in the second half of the year. This event is expected to showcase new models and attractive offers, potentially reigniting consumer interest in the automotive market.

As Indonesia navigates through these economic headwinds, the automotive industry's resilience will be tested. The coming months will be crucial in determining whether the market can regain its footing and return to growth, or if further adjustments to sales projections will be necessary.