Insider Stories - Car sales in Indonesia in January-October hit more than 1 million, despite consumers in Southeast Asia's largest economy has been embracing high interest rate environment, soaring inflation and higher downpayment policy.

According preliminary data from The Association of Indonesia Automotive Industries (Gaikindo), in October alone, Indonesians buy 110,507 units of new cars, up 4 percent from the same period last year.

The October sales brought the total January-October sales to 1,018,786 units, which represented a 10 percent increase in year-on-year.

Analysts said the popular low cost green car (LCGC) policy has helped boosting the figure, offsetting the negative impacts of high interest rate,  rising prices as well as higher downpayment policy introduced since last year.

Bank Indonesia has raised its key rate by a total of 150 basis points between June and September to 7.25 percent this year. This ultimately also caused lending rate of consumer loans, including automotive loans to increase.

Since September, the government offered incentives to automotive companies, which build assembling facilities here, amid efford to push investment.

The LCGC policy was aimed to lessen retail car prices to be less than Rp 100 million, although the reality none of the new LCGC-compliance cars are sold in that price.

Currently, in the market, there are six LCGC-compliance models -- Astra Toyota Agya, Astra Toyota Agya, Honda Brio Satya, Datsun GO+, Datsun GO, Suzuki Karimun Wagon R. -- and three more to come in 2014.

Indonesia is a darling for automotive investors, prompting them to pour billions dollar in total to capture the potential market.
With car penetration remains low, the country that had its gross domestic products (GDP) per capita reaching $3,500 last year and is experiencing a fast growing in the numbers of its middle income, is an attractive market for car makers.

The world's fourth most populous nation class saw strong car sales last year.

Indonesians bought 1.1 million new car units in 2012 and Gaikindo set sights for another 1.1 million car sales this year.

See Gaikindo data in table here