JAKARTA: Car sales remained weak in May as slowing economic growth continued to weigh on demand, with both factory shipments and retail purchases recording a double-digit decline compared to a year earlier.

Wholesales shipping from factories to dealers declined 16.1% year-on-year (y-o-y) to 60,613 units in May, down from 71,391 in the same month last year, according to figures released by the Association of Indonesian Automotive Manufacturers (Gaikindo).

Retail sales, which reflect direct consumer purchases, also posted a steep drop, falling 15.1% y-o-y to 61,339 units from 73,246 sold in May 2024.

Gaikindo chairman Jongkie Sugiarto said weakening household purchasing power was the main reason behind the slump in auto sales, as economic conditions had yet to show meaningful improvement.

“Purchasing power remains very weak, and economic growth has not picked up,” Jongkie said on Monday, as quoted by Bisnis.com.

The economy expanded 4.87% y-o-y in the first quarter of 2025, according to data from Statistics Indonesia (BPS), while household consumption expenditure grew 4.89% y-o-y and government expenditure contracted 1.38% y-o-y.

The figure was down 0.24 percentage points from the 5.11% annual gross domestic product growth recorded in the first quarter last year, and marks a drop below the 5% rate that has become something of a benchmark for the national economy.

However, auto sales showed signs of recovery on a monthly basis.

Compared with April, wholesale shipping increased 18.4% as production and shipments to dealers rebounded from the lull following the Ramadan-Idul Fitri holiday season.

Month-on-month retail sales also increased, growing 7.6% from 57,030 units in April to 61,339 in May. Jongkie said the monthly rebound was expected.

April marked the lowest monthly sales figures since the beginning of the year, he said, because business activities typically slowed around the Idul Fitri holiday.

The cumulative wholesale figure for the first five months of 2025 dropped 5.5% y-o-y to 316,981 units, while retail sales fell 9.2% y-o-y to 328,852 units.

According to Jongkie, automakers were banking on upcoming marketing efforts and a major auto exhibition to help reverse the downtrend.

“Hopefully the Indonesia International Auto Showcan help boost sales figures,” he said of one of the country’s largest automotive events, to be held from July 24 to Aug. 3 in BSD City, Banten.

Meanwhile, Bank Indonesia (BI) last month cut its benchmark BI rate from 5.75% to 5.5%, which could eventually make car loans more affordable.

Headline inflation eased to 1.6% y-o-y in May from 1.95% in April, well below the 2.84% seen in May 2024.

Analysts said that with inflation sitting well within BI’s current target range of 1.5% to 3.5%, this could open room for further monetary easing to support economic activity, though the central bank will likely remain cautious amid ongoing risks due to global uncertainties. — The Jakarta Post/ANN