The government said there are more than 2.5 million private cars and 3.8 million motorcycles in the capital Jakarta, but just 255,000 public transportation vehicles.
The data also shows private car ownership rising by at least 11 per cent a year.
Rachmat said that "if we don't take further action, the numbers of cars and motorcycles will exceed our country's population".
The freeze on car sales would be part of a national programme where cities will be ranked based on air quality.
"If there is no progress in restoring air quality, we will [stop car sales completely]," Rachmat said.
"It is a bitter pill to take, but it is for the sake of public health."