automotive

The LCGC Vehicles Are Subject To A 12% VAT, And Automotive Manufacturers Remain Optimistic About Sustained High Demand

The Low Cost Green Car (LCGC) business is expected to face greater challenges as it approaches the year 2025. This is due to the implementation of a 12% Value Added Tax (VAT) targeting LCGC vehicles, which commenced at the beginning of this year. 

Conversely, LCGC vehicles do not benefit from the fiscal incentives available to battery electric vehicles (BEVs) or hybrid cars. 

Prior to the introduction of the 12% VAT, LCGC vehicles were subject to a 3% Luxury Goods Sales Tax (LGST), which has been in effect since October 2022. According to data from the Indonesian Automotive Industry Association (Gaikindo), the LCGC segment contributed up to 21% of total national car sales from January to November 2024. During this period, wholesale sales of LCGC vehicles recorded 162,320 units, reflecting a 15% year-on-year decline compared to the same timeframe last year. 

Sri Agung Handayani, the Marketing & Corporate Planning Director of PT Astra Daihatsu Motor (ADM), acknowledged that the increase in VAT to 12%, coupled with the implementation of motor vehicle tax options, has made the automotive market, including the LCGC segment, particularly challenging this year. 

"As of January 2025, the selling price of Daihatsu LCGC has been adjusted in accordance with this policy, although some regions are still in the process of adjustment," she stated on Monday (January 6). 

According to the Daihatsu Indonesia website, the price of LCGC models such as the Sigra ranges from Rp 139 million to Rp 182.6 million, while the Ayla is priced between Rp 136 million and Rp 191.9 million. 

ADM has expressed its commitment to providing various conveniences for LCGC consumers, who are generally first-time car buyers, ensuring they can acquire Daihatsu vehicles that meet their needs. Additionally, Daihatsu continues to offer a range of financing packages for LCGC, including credit schemes, across all dealerships in Indonesia. 

Tag: Battery Electric Vehicles LCGC Vehicles Low Cost Green Car