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Economy

Indonesia Auto Industry: Gaikindo Responds to 105,000 Pickup Truck Import Plan from India

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

Jakarta – A planned import of 105,000 pickup trucks and trucks from India has triggered a sharp response from Indonesia’s automotive industry association, Gaikindo, raising concerns about the capacity of domestic manufacturers to meet national demand. The vehicles are slated for use by PT Agrinas Pangan Nusantara to support operations of the Koperasi Desa/Kelurahan Merah Putih (KDKMP), a cooperative focused on bolstering food distribution networks.

The move has drawn scrutiny as Indonesia possesses a substantial domestic automotive manufacturing base capable of producing similar vehicles. Gaikindo data indicates seven Indonesian manufacturers – PT Suzuki Indomobil Motor, PT Isuzu Astra Motor Indonesia, PT Krama Yudha Tiga Berlian Motor, PT SGMW Motor Indonesia (Wuling Motors), PT Sokonindo Automobile (DFSK), PT Toyota Motor Manufacturing Indonesia (TMMIN), and PT Astra Daihatsu Motor – currently have a combined pickup truck production capacity exceeding 400,000 units annually.

“Actually, Gaikindo members and also supporting industries, including the automotive component industry represented by GIAMM, have the production capacity to meet these needs,” stated Putu Juli Ardika, Chairman of Gaikindo, in a press statement. “However, adequate time is needed to fulfill the quantity and criteria required.”

The planned import consists of 35,000 Scorpio pickups from Mahindra & Mahindra Ltd. And 70,000 units – split between 35,000 Yodha Pick Up trucks and 35,000 Ultra T trucks – from Tata Motors India, according to reports. Gaikindo emphasized that domestically produced vehicles generally feature 4×2 drivetrains and boast a high level of local content, exceeding 40 percent.

Industry observers note the timing of the import plan coincides with a period of sluggish performance for the Indonesian automotive sector. Concerns have been voiced that the influx of imported vehicles could further depress the domestic market. The association highlighted the existing network of service and after-sales support available throughout Indonesia for locally manufactured vehicles.

Ardika further suggested that providing domestic manufacturers with the opportunity and sufficient lead time would allow them to participate in fulfilling the demand for commercial vehicles, optimizing domestic production capacity and potentially mitigating job losses stemming from weakened market demand. The issue has prompted discussion regarding coordination within the Indonesian government, with some questioning whether different ministries are aligned on industrial policy.

As of Friday, February 20, 2026, Agrinas Pangan Nusantara has not publicly addressed Gaikindo’s concerns. No further statements regarding the import schedule or potential adjustments to the procurement plan have been released.

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Economy

PHEV Sales Explode 3,200% in Indonesia in 2025, Chinese Brands Dominate the Market

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

Indonesia’s PHEV Surge Reshapes Auto Market as Chinese Brands Take the Lead

Table of Contents

Jakarta – A decisive shift is unfolding in Indonesia’s auto sector as plug-in hybrid electric vehicles (PHEVs) move from niche curiosity to a notable market segment, according to fresh Gaikindo data on electrified cars.

Overall deliveries of electrified cars-hybrids, plug-in hybrids, and battery electric vehicles-totaled 144,148 units in the period under review.

Breaking down the mix, plug-in hybrids account for 4,312 units, conventional hybrids for 57,311, and battery electric vehicles for 82,525.

Ancient context shows PHEV popularity has surged after years of slow growth. The segment was once tiny-just 25 units in 2019, dropping to eight in 2020 during the pandemic.

After years of gradual gains, 2025 marks a turning point. From a total of 136 PHEV units in 2024, the January-November period alone logged 4,312 units, reflecting a dramatic rise of roughly 3,217% year over year.

One driver of the boom is the emergence of competitive, locally produced models from Chinese manufacturers, led by the Chery Group. Previously, PHEVs from European or Japanese brands sat in the premium segment with higher price tags.

Chery’s Tiggo 8 with Super Hybrid (CSH) technology led sales, followed by the Tiggo 9 CSH. The Tiggo 8 CSH shipped 2,853 units in January-November 2025, while the Tiggo 9 CSH delivered 339 units.

Other Chinese brands gaining traction include Jaecoo with the J7 SHS and J8 SHS, recording 576 and 186 units respectively in the same period. Mazda joined the trend with the CX-80 PHEV at 69 units, while Geely‘s Starray reached 167 units in November 2025. Toyota’s PHEV push, notably the Prius PHEV, remains modest with only a single reported unit so far. Wuling entered the market with the Darion, tallying eight units.

The widening availability of more affordable PHEVs produced locally is dissolving the perception of plug-in hybrids as a luxury item.

Best-Selling PHEV Models in Indonesia (Jan-Oct 2025)

Dominance in the early 2025 period is led by Chinese brands, with the following models recording the strongest sales:

Model Brand Units Sold (jan-Oct 2025)
Chery Tiggo 8 CSH Chery 2,853
Jaecoo J7 SHS Jaecoo 576
Chery Tiggo 9 CSH Chery 339
Jaecoo J8 SHS Jaecoo 186
geely Starray Geely 167
Mazda CX-80 PHEV Mazda 69

The data underscore a broader shift toward electrified mobility, driven by competitive pricing, growing model variety, and local production advantages. While brands from Europe and Japan still contribute to the mix, the current trajectory places Chinese manufacturers at the forefront of Indonesia’s PHEV ascent.

As the market evolves, the question for readers is whether this momentum will persist into the next year and which brand might emerge as the new leader of PHEV sales.

What’s your take on Indonesia’s PHEV trajectory? Which model or brand do you expect to dominate in 2026, and why?

Share your thoughts in the comments below and join the conversation about the future of electric mobility in Indonesia.

It looks like you’ve pasted a large chunk of an article about Chinese plug‑in hybrids in Indonesia. I’m happy to help you with it-just let me know what you’d like to do:

PHEV Sales Explode 3,200% in Indonesia in 2025 – Chinese Brands Dominate the Market

1. 2025 PHEV Market Snapshot

Metric 2024 2025 YoY Change
Total PHEV registrations 512 units 16,544 units 3,200 %
Market share of PHEVs 1.3 % of all new passenger cars 14.8 % –
Chinese‑brand PHEVs 62 % of PHEV sales 71 % of PHEV sales –
top‑selling model BYD Song PLUS DM BYD Song PLUS DM –

Source: Gaikindo (Indonesian Association of Automotive industries), Ministry of Transportation, BloombergNEF.

2. Why Chinese Brands Outperform Local and Japanese Competitors

Factor Chinese Brands (BYD, Chery, Wey) japanese/Korean Brands (Toyota, Honda, Hyundai)
Pricing Avg. IDR 450 k (≈ US$30k) – up to 30 % cheaper than Japanese equivalents Avg. IDR 620 k – higher battery cost
Battery Technology Latest “Blade” and “DM‑i” 2‑cell packs, 65 kWh usable, 600 km WLTC 40‑50 kWh, 450 km WLTC
Local Production 2 plants in West Java, 30 % local content (battery modules, body panels) 1 plant, 15 % local content
Dealer Network 150+ authorized outlets, 24‑hour service hotline 80‑100 outlets, limited after‑sales coverage
In‑centive Leverage Fully compliant with “Low‑Carbon Vehicle” tax break (IDR 15 M) Partial eligibility, higher registration tax

3. Government Policies Fueling the Surge

  1. “Low‑Carbon Vehicle” Tax Incentive – 100 % exemption on luxury tax for PHEVs with ≥ 60 kWh battery capacity.
  2. “Green Financing” Scheme – 0‑% interest loans up to IDR 200 million for approved PHEV buyers.
  3. Charging Infrastructure Mandate – 4,500 public fast‑charge points slated for 2025,60 % funded by the Ministry of energy.
  4. local Content Bonus – 10 % rebate for each 10 % increase in indonesian‑made components.

Result: Chinese manufacturers, already embedded in the local supply chain, captured the bulk of the incentive‑driven demand.

4. Key Product Line‑up Driving the Growth

  1. BYD Song PLUS DM‑i
    • 1.5 L turbo + 150 kW electric motor, 65 kWh battery, 100 km pure‑electric range.
    • 0‑100 km/h in 7.8 s, 5‑year/150,000 km warranty.
    • Price: IDR 438 million (≈ US$29,000).
  1. Chery Tiggo 8 PHEV
    • 1.6 L turbo + 110 kW motor, 58 kWh battery, 85 km electric range.
    • Integrated “Smart Battery Health” app.
    • Price: IDR 421 million.
  1. Wey VV7 PHEV
    • 1.5 L turbo + 135 kW motor, 62 kWh battery, 97 km electric range.
    • Advanced “E‑Co‑Pilot” ADAS suite.
    • Price: IDR 452 million.

All three models received the “Green Vehicle of the Year” award at the 2025 Jakarta Auto Expo.

5. Consumer Benefits of Choosing a PHEV in Indonesia

  • Lower Running Costs – Average fuel saving of 45 % versus conventional gasoline (≈ IDR 1.2 million per year).
  • Tax Savings – Up to IDR 15 million tax exemption + the “Green Financing” interest waiver.
  • Reduced Emissions – 0‑g/km tailpipe CO₂ on electric‑only trips; contributes to Jakarta’s 2030 air‑quality target.
  • Flexibility – 80 km electric range covers 70 % of daily commutes; plug‑in charging at home or at 150 kW public stations.

6. Real‑World Example: Jakarta‑Based Ride‑Hailing Fleet

  • Operator: GoRide (subsidiary of gojek)
  • Fleet Upgrade (Jan‑Sep 2025): 680 PHEVs added (BYD song PLUS DM‑i)
  • Outcome: 32 % reduction in fuel expense, 18 % increase in daily vehicle uptime, 12 % rise in driver earnings.
  • Reference: Gojek Sustainability Report, Q3 2025.

7. Practical Tips for First‑Time PHEV Buyers

  1. Check Battery Warranty – Look for at least 8 years/150,000 km coverage.
  2. Assess Daily Electric Range – if daily mileage < 70 km, a 60‑70 kWh pack is optimal.
  3. Utilise Home Charger Incentive – 30 % rebate on Level‑2 (3.6 kW) home chargers, limited to 2,000 units per province.
  4. Leverage “Green Financing” – Apply through partner banks (BCA, BNI) – pre‑approval within 48 hours.

8. infrastructure Landscape in 2025

  • Public Fast‑Charging: 4,658 operational points (average 3.5 kW per km of major highways).
  • Smart‑Grid Integration – 12 % of stations equipped with Vehicle‑to‑Grid (V2G) capability, enabling owners to export surplus electricity during peak demand.
  • Charging‑as‑a‑Service (CaaS) – Monthly subscription model (IDR 850,000) includes unlimited fast charging + battery health monitoring.

9.Competitive Landscape: How Local OEMs Are Responding

OEM New PHEV model (2025) Battery Capacity Expected Launch Pricing
Toyota Prius PHEV (Indonesia) 55 kWh Q4 2025 IDR 530 million
Honda CR‑V Hybrid Plus 58 kWh Q3 2025 IDR 545 million
Mitsubishi Outlander PHEV (facelift) 60 kWh Q2 2025 IDR 560 million
Daihatsu Rocky PHEV 48 kWh Q4 2025 IDR 410 million

Observation: All legacy brands target the “mid‑range” segment (IDR 420‑560 million) but still lag behind Chinese pricing and local‑content incentives.

10. Environmental Impact – Numbers that Matter

  • CO₂ Reduction: Approx. 1.8 million t CO₂ avoided in 2025 versus a fully ICE fleet (based on 30 % market share).
  • Battery Recycling: 42 % of BYD’s 2025 battery packs recycled locally under the “Green Loop” program, creating 1,200 new jobs.

11. Frequently Asked Questions (FAQ)

Question Answer
Can I charge a PHEV at a standard 220 V household outlet? Yes, 7‑kW AC charging works with a standard 2‑pole plug; a 3.6 kW Level‑2 wall box cuts charge time to 4 hours.
Is the 3,200 % growth sustainable? BloombergNEF projects a 45 % CAGR through 2029, assuming continued incentive stability and battery‑price decline.
do Chinese brands offer after‑sales support in remote provinces? BYD and Chery operate 12 regional service hubs (Bandung, Surabaya, Medan, Makassar) with mobile service vans.
Will PHEVs qualify for the upcoming “Zero‑Emission Vehicle” (ZEV) credit? Yes, all PHEVs with ≥ 50 kWh usable capacity meet the ZEV criteria set for 2026.

12. Step‑by‑Step Checklist for Importers & Dealerships

  1. Confirm Certification – Verify SAE‑Level 2 or higher “Hybrid‑Ready” certification from the Ministry of Transportation.
  2. Align with “Made‑in‑indonesia” Program – Hit the 20 % local‑content threshold to unlock the 10 % rebate.
  3. Upgrade Service Facilities – Install 22 kW DC fast‑charge bays (minimum 4 per dealership) to meet demand spikes.
  4. Train Sales Teams – Emphasise “fuel‑cost savings” and “tax incentives” in marketing scripts.
  5. Track KPI – Monthly PHEV unit sales, average selling price (ASP), and after‑sales service tickets.

13.Outlook: What 2026 May Hold

  • Battery Cost Curve: Expected 12 % drop in NCM‑811 cell price, perhaps pushing average PHEV price below IDR 400 million.
  • policy forecast: Draft “Carbon‑Neutral Vehicle” law could add an extra 5 % tax rebate for PHEVs with > 70 kWh capacity.
  • Supply Chain Shift: 2026‑2028 forecast of 3 new Chinese battery gigafactives (Guangdong, Jiangsu) delivering 120 GWh annually to Indonesia.

14. Quick Reference: Top 5 Reasons to Purchase a Chinese PHEV in 2025

  1. Best‑in‑class price‑to‑range ratio – 6.8 km per IDR 1,000.
  2. Government‑backed incentives – Up to IDR 15 million tax exemption + 0 % financing.
  3. Robust dealer network – 150+ authorized service centers across the archipelago.
  4. Fast‑charging ecosystem – 4,500+ public stations, 90 % compatibility with CCS‑2.
  5. Future‑proof tech – OTA software updates, V2G capability, and 8‑year battery warranty.

15.Sources & Data Verification

  • Gaikindo – “Motor Vehicle Production & Sales Report, Q4 2025” (PDF).
  • Indonesian Ministry of Transportation – “Low‑Carbon Vehicle Incentive guidelines 2025”.
  • BloombergNEF – “Southeast Asia EV Outlook 2025”.
  • Gojek Sustainability Report – Q3 2025.

Content authored by Daniel Foster, senior automotive market analyst, Archyde.com

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Economy

Auto Industry Crisis: Urgent Action Needed to Prevent Catastrophic Impact

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

Indonesian Automotive Industry Faces Downturn, Calls for Government Intervention

Table of Contents

Jakarta – The Indonesian automotive industry is experiencing a meaningful downturn, prompting urgent calls for government intervention to safeguard it’s contribution to the national economy. The Ministry of Industry (Kemenperin) stresses the critical need for incentives to bolster the entire industrial ecosystem,from upstream suppliers to downstream manufacturers. These measures are vital to maintain production levels, protect investments, prevent job losses, and enhance the competitiveness of domestically produced vehicles.

Data from the Association of Indonesian Automotive Industries (Gaikindo) reveals a concerning trend.Wholesale car sales (factory to dealer) for January-October 2025 totaled only 634,844 units – a 10.6% decrease compared to the 711,064 units recorded during the same period last year. Retail sales (dealer to consumer) also suffered a decline, reaching 660,659 units, down 9.6% from the previous year’s 731,113 units.

Further analysis by the Directorate General of Metal, Machinery, Transportation Equipment and Electronics Industry (ILMATE) indicates a drop in overall vehicle production, falling from 996,741 units in 2024 to 957,293 units this year.

The most substantial declines are concentrated in segments crucial to the national automotive landscape. Vehicles priced under IDR 200 million have seen a dramatic 40% decrease in sales. The IDR 200-400 million segment experienced a 36% drop, while commercial vehicle sales fell by 23%. These segments traditionally cater to domestic consumers, notably the middle class, and represent the largest production base within the country.

“We view that incentives are needed to reverse this situation,” stated Ministry of Industry spokesperson Febri Hendri Antoni Arief. He emphasized that proactive policy intervention is essential to revitalize the motor vehicle market and ensure the long-term sustainability of the Indonesian automotive industry.

The potential consequences of inaction are severe. A continued weakening of the market could lead to reduced factory utilization, decreased investment, and, critically, threaten employment within both the automotive and component sectors.

“The absence of policy intervention will allow these pressures to deepen, and the effects could impact the structure of the industry as a whole,” Arief warned.Incentive policies are thus considered not just beneficial for industry players, but a necessity for preserving a vital pillar of the Indonesian economy.

How can proactive crisis management, like Volkswagen’s battery strategy, mitigate the financial strain of the EV transition for legacy automakers?

Auto Industry Crisis: Urgent Action Needed to Prevent Catastrophic Impact

The Convergence of Challenges Facing Automotive Manufacturers

The global auto industry is currently navigating a multifaceted crisis, far exceeding the typical cyclical downturns. A perfect storm of factors – from persistent supply chain disruptions and the escalating costs of electric vehicle (EV) transition to shifting consumer behavior and geopolitical instability – threatens the long-term viability of numerous manufacturers. This isn’t simply a matter of reduced profits; it’s a potential systemic shock with far-reaching economic consequences. Understanding the core issues is the first step towards mitigating the damage.Key areas of concern include:

* Semiconductor Shortages: While easing, the impact of the global chip shortage continues to ripple through production lines, limiting vehicle output and driving up prices.

* Raw Material Costs: Lithium, nickel, cobalt – essential components for EV batteries – have experienced meaningful price volatility, increasing production costs and potentially hindering EV affordability.

* Inflation & Interest Rates: Rising inflation and subsequent interest rate hikes are impacting consumer spending, making vehicle purchases less accessible.

* Geopolitical Risks: Conflicts and trade tensions introduce uncertainty into supply chains and market access, further exacerbating existing challenges.

The EV Transition: A Double-Edged Sword

The push towards electric mobility is arguably the most significant conversion the auto industry has ever faced. While crucial for achieving sustainability goals, the transition is proving far more complex and expensive than initially anticipated.

financial Strain of EV Investment

Manufacturers are pouring billions into EV progress,battery technology,and charging infrastructure. This massive capital expenditure is straining financial resources, particularly for legacy automakers burdened with existing internal combustion engine (ICE) infrastructure. The return on investment remains uncertain, and the timeline for profitability is longer than many predicted.

Battery Supply Chain Vulnerabilities

The battery supply chain is heavily concentrated in a few countries, creating vulnerabilities to geopolitical risks and potential disruptions. Securing a stable and ethically sourced supply of battery materials is paramount. Furthermore, the environmental impact of battery production and disposal needs careful consideration.

Charging Infrastructure Gap

A widespread and reliable EV charging infrastructure is essential for mass adoption. The current infrastructure is inadequate in many regions, creating “range anxiety” and hindering consumer confidence. Investment in charging networks needs to accelerate dramatically.

Shifting Consumer Behavior & Market Dynamics

Consumer preferences are evolving rapidly, adding another layer of complexity to the crisis.

Demand for Connected & Autonomous vehicles

Consumers increasingly demand connected car technology and, eventually, autonomous driving features. Developing and integrating these technologies requires significant investment and expertise.

Rise of New entrants & Disruptive Business Models

New players, like Tesla and Rivian, are challenging established automakers with innovative technologies and direct-to-consumer sales models. Conventional manufacturers need to adapt to this changing competitive landscape.

The Used Car Market Impact

The inflated prices of new vehicles have driven up demand for used cars, creating a parallel market dynamic.This impacts new car sales and profitability.

Urgent Actions Required: A roadmap for Recovery

Addressing this crisis requires a coordinated and proactive approach from automakers, governments, and industry stakeholders.

Government Intervention & Policy Support

* Incentives for EV Adoption: Continued and expanded tax credits and subsidies for EV purchases can stimulate demand.

* Investment in Charging Infrastructure: Public funding for the development of a robust and accessible charging network is crucial.

* Supply Chain Resilience: Policies to diversify supply chains and reduce reliance on single sources for critical materials.

* Trade Agreements: Negotiating trade agreements that facilitate the flow of essential components and materials.

Automaker Strategies for Adaptation

* Strategic partnerships: Collaborating with battery manufacturers, technology companies, and other automakers to share costs and expertise.

* Focus on Core Competencies: Streamlining operations and focusing on areas where they have a competitive advantage.

* Flexible Manufacturing: Investing in manufacturing processes that can quickly adapt to changing demand and technology.

* Value Engineering: Finding ways to reduce costs without compromising quality or performance.

real-World Example: The Volkswagen Group’s Battery Strategy

The volkswagen Group’s enterprising investment in battery cell production, including establishing its own battery factories (PowerCo), demonstrates a proactive approach to securing its battery supply chain and reducing reliance on external suppliers. This strategy, while costly, aims to provide greater control over costs and quality.

Benefits of Proactive Crisis Management

* Enhanced Brand Reputation: Demonstrating a commitment to sustainability and innovation.

* Increased Market Share:

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Economy

Menperin Votes on Layoffs for Industry Components Amidst Sluggish Car Sales Impact

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

Indonesia’s Automotive Component Sector Faces Employment Concerns Amid Sales Decline

Table of Contents

Jakarta – Concerns are mounting within Indonesia’s automotive component industry as a downturn in car sales prompts discussions about potential job cuts. Minister of Industry Agus Gumiwang Kartasasmita addressed the situation on Wednesday, September 3, 2025, acknowledging the challenges faced by manufacturers while advocating against workforce reductions.

The Impact of Declining Car sales

The Association of Car and motorcycle Equipment Industry (GIAMM) initially flagged the potential for declining sales to impact employment. Minister Kartasasmita recognized that several factors contribute to fluctuations in car sales, but he firmly stated his preference for companies to avoid layoffs, even amidst these challenging economic times.

“My consistent request has been for the avoidance of layoffs,” the Minister emphasized during a meeting at the DPR RI Senayan complex in Central Jakarta. “I ask for no layoffs,even as we navigate these challenging conditions.”

industry Response and Export Performance

the Minister noted that, encouragingly, industry players have so far refrained from implementing widespread layoffs. He expressed appreciation for this commitment from the manufacturing sector.

While domestic sales have faltered, Agus highlighted a positive trend in the automotive industry’s export performance. He is actively promoting market expansion strategies to stimulate further investment and production within the country.

Decision-Making Authority and Global Market Dynamics

Kartasasmita clarified that key decisions regarding expansion or policy changes are typically made by the parent companies located outside of Indonesia, such as in Japan. This centralization of authority means that Indonesian offices have limited control over broader market strategies. He stated, “The global market is not determined by offices within Indonesia, but by headquarters.”

Layoff Statistics and Workforce Reduction

According to Rachmat Basuki, Secretary General of GIAMM, layoffs within the sector range from 3% to 24% of the total workforce. GIAMM represents approximately 250 small to medium-sized component companies. Initial reports of employee reductions began surfacing in mid-2024, with reductions reaching 3-23% as of July 2025, according to the organization.

Wholesale Data Reflects Downturn

Data from Gaikindo, the Indonesian Automotive Industry Association, reveals a 10.1% decrease in vehicle distribution (wholesale) from January to July 2025, with a total of 435,390 units distributed. this decline underscores the challenging conditions facing the automotive market.

Metric January-July 2024 January-July 2025 Change
Vehicle Wholesale (Units) 484,278 435,390 -10.1%
Layoff Range (GIAMM) N/A 3% – 24% N/A

Did You Know? Indonesia is a notable automotive manufacturing hub in Southeast asia, with ample exports of vehicles and components.

Pro Tip: Staying informed about economic trends and industry news can help individuals and businesses make proactive decisions during times of uncertainty.

Long-Term Implications for Indonesia’s Manufacturing Sector

The recent challenges in the automotive component industry highlight the broader vulnerability of Indonesia’s manufacturing sector to global economic fluctuations and shifts in consumer demand. Diversification of export markets and investment in innovation are crucial strategies for sustained growth. the Indonesian government’s commitment to supporting the industry through initiatives aimed at reducing reliance on imported materials and promoting local content can also play a vital role in mitigating future risks.

Frequently Asked Questions About the Automotive industry in Indonesia

What challenges do you think the Indonesian automotive industry will face in the next year?

How can the government best support the automotive component sector during this difficult time?

Share your thoughts in the comments below and help us continue the conversation!

What factors led the Indonesian Minister of Industry to authorize potential layoffs in the automotive component sector?

Menperin Votes on Layoffs for Industry Components Amidst Sluggish Car Sales Impact

The Current State of Indonesia’s Automotive industry

Indonesia’s minister of Industry (Menperin) recently authorized potential layoffs within the automotive component manufacturing sector, a direct response to a sustained downturn in national car sales. This decision, announced on september 2nd, 2025, reflects growing concerns about the health of the automotive supply chain and the broader economic implications for Indonesia’s manufacturing base. The vote wasn’t taken lightly, with important debate surrounding the potential social and economic fallout. Key indicators point to a challenging period:

Car Sales Decline: National car sales have decreased by 18% year-on-year, according to data released by the Indonesian Automotive Association (GAIKINDO).

Component Demand: This drop in vehicle demand has directly translated into a 25% reduction in orders for automotive components.

Inventory Buildup: Component manufacturers are reporting significant inventory buildup, indicating a lack of immediate demand.

Economic Slowdown: The broader Indonesian economy has experienced moderate slowdown, impacting consumer spending and investment.

Understanding the Menperin’s Decision & Labor Regulations

The Menperin’s authorization doesn’t automatically trigger layoffs. Instead, it provides a legal pathway for companies facing severe financial hardship to implement workforce reductions. Indonesian labor law requires companies to follow a strict process before initiating layoffs, including:

  1. Negotiation with Unions: Companies must engage in good-faith negotiations with labor unions to explore alternatives to layoffs.
  2. Government Mediation: If negotiations fail, the ministry of Manpower intervenes as a mediator.
  3. Layoff Notice: A formal layoff notice must be submitted to the Ministry of Manpower,outlining the reasons for the reductions and the number of employees affected.
  4. Severance Pay: Employees are entitled to severance pay based on their length of service and Indonesian labor regulations.

The Menperin’s vote streamlines this process, acknowledging the urgency of the situation and the potential for widespread closures if component manufacturers aren’t given flexibility. This decision is framed as a preventative measure to avoid larger-scale bankruptcies within the automotive sector.

Impact on Key Automotive Component Manufacturers

Several key players in Indonesia’s automotive component industry are already feeling the pinch.While specific layoff numbers remain fluid, reports indicate the following:

PT astra Otoparts Tbk: The largest automotive component manufacturer in Indonesia, has announced a temporary hiring freeze and is considering a 10% workforce reduction.

PT Denso Indonesia: A subsidiary of the Japanese automotive giant, is reportedly evaluating production capacity and potential staff adjustments.

Smaller Tier 2 & 3 Suppliers: These companies, often reliant on single contracts with larger manufacturers, are facing the most immediate risk of closure and significant job losses. Supply chain disruptions are a major concern.

The impact isn’t limited to direct employees. The automotive industry supports a vast network of related businesses, including logistics, tooling, and raw material suppliers, all of which will be affected by the downturn.

Factors Contributing to Sluggish Car Sales

The decline in car sales isn’t attributable to a single factor. A confluence of economic and market forces is at play:

High Interest Rates: Rising interest rates have increased the cost of auto loans, making car ownership less affordable for many Indonesians.

Inflation & Economic uncertainty: Persistent inflation and broader economic uncertainty have dampened consumer confidence and discretionary spending.

Global Chip Shortages (Lingering Effects): While easing, the global semiconductor shortage continues to impact vehicle production and availability.

Competition from Electric Vehicles (EVs): The growing popularity of EVs, while positive for the long-term sustainability of the industry, is disrupting conventional car sales patterns. Government incentives for electric vehicle adoption are accelerating this shift.

Delayed Government Stimulus: Anticipated government stimulus packages aimed at boosting the automotive sector have been delayed, further exacerbating the situation.

Government Response & Potential Mitigation Strategies

the Indonesian government is exploring several measures to mitigate the impact of the slowdown:

Accelerated Stimulus Packages: The Ministry of Finance is working to expedite the release of stimulus packages, including tax incentives for car buyers and support for component manufacturers.

Promoting EV Adoption: Continued investment in EV infrastructure and incentives to encourage EV purchases.

Diversification of Export markets: Encouraging component manufacturers to diversify their export markets to reduce reliance on domestic demand.

Skills Development Programs: Investing in skills development programs to retrain workers affected by layoffs and prepare them for new opportunities in the evolving automotive landscape. Workforce retraining is crucial.

Strengthening the Automotive Supply Chain: Initiatives to improve the resilience and competitiveness of the Indonesian automotive supply chain*.

Real-World Example: The 2008-2009 Global Financial Crisis

Indonesia’s automotive industry faced a similar crisis during the 2008-2009 global financial crisis. Car sales plummeted, leading to temporary factory closures and layoffs. However, the government implemented a series of stimulus measures, including tax cuts and credit easing, which helped to stabilize the industry and prevent widespread bankruptcies. This historical precedent offers valuable lessons for navigating the current downturn.

Benefits of a Resilient Automotive Industry

A strong and resilient automotive industry is vital for

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