automotive

The Indonesian Automotive Market And Car Exports Are Projected To Experience Growth In 2025

The Director of Production Balance at the Central Statistics Agency, Puji Agus Kurniawan, has stated that the automotive market in Indonesia is expected to grow by 2025. He also noted that export demand is anticipated to remain robust in the coming year. 

He indicated that the increase in domestic automotive demand and exports is occurring despite significant domestic challenges, such as the implementation of a 12 percent Value Added Tax (VAT) and additional regional tax levies that will take effect in early 2025. 

"Exports of motor vehicle products and parts, excluding motorcycles, are projected to show a positive trend, reaching 2.57 billion US dollars in the third quarter of 2024," Puji remarked in Jakarta on December 20, as reported by Antara. He expressed confidence that the automotive industry will continue to exhibit strong enthusiasm in the coming years, despite various policies affecting vehicle products. 

"Currently, our VAT is at 11 percent, so with the increase to 12 percent next year, I believe that potential buyers will not be overly concerned, as the rise is only 1 percent," he stated. 

Incentives for Locally Produced Hybrid Vehicles 

Previously, the government announced a package of incentives for electrified vehicles as a means to boost the industry, including incentives for battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs). 

The government has established an incentive policy for hybrid vehicles through a 3 percent Luxury Goods Tax (LGT). This policy aims to enhance the sales of hybrid vehicles in Indonesia, especially in light of the upcoming 12 percent VAT increase next year. 

Additionally, the government is providing other incentives, such as a 10 percent VAT exemption for the import of completely knocked down (CKD) electric vehicles, a 15 percent LGT exemption for CKD and completely built up (CBU) electric vehicles, as well as a duty-free status for the import of CBU electric vehicles. 

Tag: Indonesian Automotive Market Puji Agus Kurniawan Value Added Tax