I am using cheerio to mutate a xml file in node. I am inserting the node/element <target> after <source> which works with the insertAfter() api in oldEl.translation.insertAfter(msgSourceEl);.

However, I loose my indention:

  <trans-unit id="title" datatype="html">
    <source>Login</source><target>iniciar sesión</target>

Is it possible, or is there a way, to indent the newly inserted <target>iniciar sesión</target> underneath the <source> element?

Just fix the final XML indentation :

It is possible to use xml-beautifier to achieve the human-readable indented XML

import beautify from 'xml-beautifier';
const HumanXML = beautify(XML);
console.log(HumanXML); // => will output correctly indented elements

(EXTRA) No need for Cheerio :

In the following example we will be using xml2js to manipulate the XML as a JSON and then build it back to the original XML format

var xml2js = require('xml2js');
var xml = "<trans-unit id=\"title\" datatype=\"html\"><source>Login</source></trans-unit>"

xml2js.parseString(xml, function (err, result) {
    result["trans-unit"].target=["iniciar sessión"]
    var builder = new xml2js.Builder();
    var xml = builder.buildObject(result);
    console.log(xml)
});

Final Output :

<trans-unit id="title" datatype="html">
  <source>Login</source>
  <target>iniciar sessión</target>
</trans-unit>

I am sure you are doing this as part of a loop, so it shouldn't be hard to extrapolate the example to make it work . I suggest using underscore for the usual (each, map, reduce, filter...)