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July 3, 2008

Indonesia's June vehicle sales seen up 36%
Indonesia's vehicle sales are estimated to have risen by 35.7 percent last month despite a government decision to raise subsidised fuel prices in May, Reuters quoted Toyota Astra Motor as saying Tuesday.

Jodjana Jody, head of sales at Toyota Astra Motor, estimated total sales are expected to be around 53,500 in June compared to 39,424 units in the year-ago period and 50,699 units in May.

He told Reuters that market leader Toyota sold 18,144 units last month, up 36.3 percent from the same month in 2007.

The data is seen by analysts as a gauge of overall activity in Southeast Asia's largest economy.

Toyota Astra Motor, owned by PT Astra International Tbk ASII.JK, the largest automotive distributor in the country, is the distributor of Toyota cars in Indonesia.

Jody said the strong June sales were a strong signal that total vehicle sales for this year could top an industry association forecast of 500,000 units.

"In the first half alone, total sales were already around 290,000 units. The second half is normally stronger than the first half so I am confident that we can top 500,000 units this year," Jody said.

Indonesia's automotive was severely hit the last time the government raised fuel prices in October 2005, but the sector has started recovering from that slowdown.

Sales in the first five months of 2008 rose by nearly 60 percent, helped by lower interest rates and despite the country's consumer confidence being dented by building inflation.

However, analysts say the central bank's decision last month to hike its benchmark rate by a total of 50 basis points in the past two months, could hurt sales in the future.

They say high inflation from rising food prices and energy costs could also weigh on the automotive industry.

But some analysts and industry experts have said they still expect this year's vehicle sales to top 500,000 units, compared to 434,449 units in 2007, even after the hike in subsidised fuel prices.

Most vehicle purchases in Indonesia are financed by loans, making sales sensitive to interest rates.

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