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May 12, 2008

Motorbike sales up despite fuel hike

Indonesia’s Astra Honda Motor, the country's biggest motorcycle company by sales volume, said on Wednesday it expects domestic sales to top 5 million units this year despite a government plan to raise fuel prices, reported Reuters.

Astra Honda, jointly owned by Honda Motor Co and Astra International Tbk ASII.JK, is sticking to its sales target of 2.4-2.6 million units this year, the company's marketing director, Johannes Loman, told reporters.

The Indonesian government is expected to raise subsidised fuel prices by the end of this month by an average of 30 percent to ease the burden on its state budget from a ballooning subsidy bill due to rising international oil price.

"We are expecting total domestic sales volume of between 5.0-5.5 million units this year... For our own sales we are aiming to sell 2.4-2.6 million," Loman said when asked about the impact of the planned fuel price hike on the industry.

Last year around 4.7 million motorcycles were sold in the fourth most populous nation, home to around 226 million people. Demand for motorcycles have been strong, supported by low interest rates and rising fuel prices.

Many Indonesians have switched from cars to motorbikes to cut spending on fuel and deal with chronic traffic congestion. But Southeast Asia's largest economy is facing strong inflationary pressures from soaring energy and food prices, as well as the global economic slowdown.

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