However, prospects for car sales, a key element of consumer demand, have been clouded by the earthquake and tsunami disaster that struck Japan on March 11th. Sales rose by 29% year on year in the first quarter of 2011, to 225,061 units, according to the Indonesian Automotive Manufacturers Association (Gaikindo), boosted by the rupiah's strength against the US dollar. Despite this strong performance, sales are expected to fall in the second half of 2011 owing to severe disruption of production of components and of supply chains. Toyota and Daihatsu, which account for 90% of the local market, are both Japanese-owned marques. Although their vehicles are part-manufactured and assembled in Indonesia, many components are produced by factories in Japan. Inventories have been run down and shipments of parts from Japan have come to a near-halt. Sales of cars fell by 7% month on month in April, to 60,702 units, and Gaikindo has cut its 2011 sales forecast to 800,000 units, from 850,000 previously.

The motorcycle industry is less exposed to disruption in Japanese supply chains, as it uses 95% local components, with only electronic parts being imported from Japan. Increased sales of motorcycles may therefore take up some of the slack left by slumping car sales. Motorcycle sales rose by 21% year on year in March, to 2m units, according to the Indonesian Motorcycle Industry Association.