First positive 4W wholesale sales increase in more than a year. Four-wheeler (4W)wholesale sales rose 3.8% y-o-y in April, helped by a low base, while January-Aprilsales fell 3% y-o-y. Sales of low-cost green cars (LCGC) were up 15% y-o-y in April (up3% y-t-d) while sales ex LCGC were up 2% y-o-y (down 4% y-t-d). Retail sales dropped4% y-o-y for the month (up 1% y-t-d). 2W sales fell 9% y-o-y in April (down 2% y-t-d).

　　Astra’s 4W sales hit a seven-month high; 2W share continues to rise. 4W sales of47,332 units (up 2% y-o-y) were the highest in seven months at Astra, pushing thecompany’s market share to 57% in April from 48% in 1Q16. With new launches suchas the Toyota Sienta, we expect Astra to return to a c50% market share. Astra’s 2Wshare rose, both in April and in January-April, to c73% versus 69% in 2015.

　　Honda took a breather this month; Nissan sinks to a new low. Honda’s marketshare fell to 17% in April (vs 21.8% in 1Q16) as sales dropped sharply by 22% m-o-mbut were up 36% y-o-y. The newly launched seven-seater SUV Honda B-RV is thesecond-largest-selling vehicle in the market y-t-d (c5,700 units per month) afterToyota Avanza. Nissan sales ex Datsun fell to only 417 units down 68% y-o-y (Apr-Jan sales were down 49% y-o-y).

　　Sales volumes should get incrementally better. In our view, the easier base for 4W(monthly average of 81k in 2Q15 vs 94k in 1Q15) should lead to a y-o-y increase insales in 2Q16. Passenger segment – which is driven by consumption – turned positivey-o-y in February 2016 and stayed positive in March (April 2016 data not yet available;see chart 3). In contrast, the commercial segment (pickups, trucks, buses), which isdriven by investments, has continued to decline at a double-digit rate. Commercialvehicles’ y-o-y base also gets easier in 2Q16 (21k vs 27k in 1Q).

　　Retain Buy on ASII and Hold on AUTO. We have a Buy rating on ASII shares, witha sum-of-the-parts target price of IDR8,200. We have a Hold rating on AUTO shares,with a DCF-based target price of IDR1,800.