automotive

The Automotive Industry Is Experiencing A Downturn, Prompting The Ministry Of Industry To Provide Incentives For Hybrid And Electric Vehicles

In 2025, the Ministry of Industry proposed the provision of incentives and policy relaxations, such as the government-subsidized luxury tax (PPnBM DTP) for hybrid vehicles (PHEV, full, mild) at a rate of 3%, and a 10% subsidy for electric vehicles (EV). 

"As a significant contributor to the national GDP, the automotive industry is projected to experience a decline of Rp4.21 trillion in 2024. This will affect the backward linkage sector by Rp4.11 trillion and the forward linkage sector by Rp3.519 trillion," stated Setia Darta, Director General of Metal, Machinery, Transportation Equipment, and Electronics Industry (ILMATE), in a press release on Tuesday, January 14, 2025. 

According to calculations by LPEM Universitas Indonesia, the incentives are expected to have both direct and indirect positive impacts on GDP products, reaching Rp177 trillion with a 10% PPnBM rate, Rp181 trillion with a 7.5% rate, Rp185 trillion with a 5% rate, and Rp194 trillion with a 0% rate, compared to the business-as-usual scenario of Rp168 trillion. 

Additionally, there will be an increase in automotive employment by 7,740 individuals with a 10% PPnBM, 11,611 individuals with a 7.5% rate, 15,481 individuals with a 5% rate, and 23,221 individuals with a 0% rate. 

Tag: Automotive Industry Electric Vehicles