Sat, 03 Feb 2007
The country’s domestic vehicle sales are likely to rise 25% this year, marking a recovery in the sector hit by high interest rates and weak purchasing power, a trade body said on Thursday (25/1/07).

High fuel prices and interest rates sent vehicle sales down 40% last year to 318,883 units after a historic high of 533,910 in the previous year.

Sales have been recovering in recent months after the central bank started cutting the benchmark interest rate and Bambang Trisulo, chairman of the Automotive Industry Association (Gaikindo), told Reuters domestic sales next year are likely to return close to 2005 levels if interest rates continue to fall.

"If the 8.5% (interest) rate can be achieved in the first half... it could exceed 400,000 units (in 2007)," Trisulo said in an interview, referring to the central bank's reference money market rate, known as the BI rate. "We will see how things work in the first quarter, if the numbers are encouraging, we might revise up our forecast."

Trisulo also said exports of completely built vehicles this year are likely to grow 61% to about 50,000 units.



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