Indonesia's automotive market is projected to experience significant growth in 2025, driven by both domestic demand and expanding export activities, according to Puji Agus Kurniawan, Director of Production Balance at Statistics Indonesia (BPS). Despite challenges, such as the planned increase in VAT to 12% and additional regional taxes in early 2025, Puji highlighted the strong potential for the automotive sector. In Q3-2024, exports of motor vehicles and spare parts, excluding motorcycles, showed a positive trend, reaching USD 2.57 billion. The Indonesian government has also introduced incentives to boost the electric vehicle (EV) industry, including tax reductions on battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs). Hybrid vehicles will benefit from a reduced luxury tax (PPnBM DTp) rate of 3%, alongside exemptions on import duties for completely built-up (CBU) electric vehicles.
The optimism extends to export performance, with data from Gaikindo revealing that vehicle exports from Indonesia reached 505,134 units in 2023, a 6.7% increase from 473,602 units in the previous year. For 2024, exports are projected to surpass 1 million units, reflecting the sector's resilience and the government's supportive policies. Puji expressed confidence that the 1% increase in VAT is unlikely to deter vehicle purchases significantly, emphasizing the industry's robustness. These measures aim to enhance competitiveness and accelerate the transition to cleaner energy vehicles amid rising domestic and global demand.
