Jakarta. The Indonesian Automotive Industry Association (Gaikindo) is considering revising its vehicle sales target for 2024 due to a decline in consumer purchasing power. The initial target of 1.1 million vehicle sales for the year now appears increasingly difficult to achieve.

Gaikindo Chairman Jongkie Sugiarto said that the noticeable drop in purchasing power has adversely affected vehicle sales growth in 2024. Although there has been a slight increase in sales during the second half of the year, the numbers remain insignificant. Jongkie acknowledged that the 1.1 million unit sales target is likely to be revised.

“The decline in consumer purchasing power has been substantial, resulting in sluggish sales. It seems we will need to revise our sales projections,” he said on Saturday.

“We hope that automotive exhibitions outside Jakarta and the Jakarta Auto Week will help boost sales,” he added.

The Central Statistics Agency (BPS) reported a deflation of 0.12 percent in September, marking the fifth monthly deflation this year and raising concerns about decreasing purchasing power.

Meanwhile, Gaikindo Secretary Kukuh Kumara noted that achieving the 1.1 million unit target by year-end will be challenging, given that only three months remain until December. According to Gaikindo data, wholesale vehicle sales from January to August 2024 reached 560,619 units, while retail sales during the same period totaled 584,879 units.

However, he pointed out that several factors could drive an increase in vehicle sales in the near future, such as the recent reduction in interest rates by the Federal Reserve, mirrored by Bank Indonesia.

In September 2024, the Federal Reserve cut its benchmark interest rate by 50 basis points to a range of 4.75 percent to 5 percent. Simultaneously, Bank Indonesia reduced the BI Rate by 25 basis points to 6 percent.

This decline is expected to foster positive sentiment in the motor vehicle market, particularly with improved access to credit.

“With the current trend of decreasing interest rates from both the Federal Reserve and Bank Indonesia, it will undoubtedly be easier to obtain credit,” he said.