KBRN, Jakarta: The Indonesian automotive industry is currently experiencing pressure on sales, but the government is trying to maintain its resilience through continued incentives next year. This policy is expected to hold back contraction and support the sector's contribution to the economy.

Indonesian Minister of Industry Agus Gumiwang Kartasasmita assessed that the automotive industry has a significant multiplier effect on the economy, from employment to value-added creation. He emphasized that this sector is too strategic to be allowed to weaken without policy support.

“This sector is very crucial, we cannot ignore it,” Minister Agus said in Jakarta on Tuesday, December 2, 2025, as quoted by Antara.

He added that his office will continue to propose incentives or stimulus for the automotive sector to the government.

He explained that the automotive industry is currently experiencing a contraction, so it needs additional fiscal support. This decline reflects the need for policy intervention so that production and distribution activities do not slow down further.

Data from the Indonesian Automotive Industry Association (Gaikindo) shows that wholesale car sales during January–October 2025 were only 634,844 units. This figure is down 10.6 percent compared to the same period last year, which reached 711,064 units.

On the retail sales, sales from dealers to consumers during January-October 2025 were recorded at 660,659 units. This realization is down 9.6 percent from last year's 731,113 units.

According to Minister Agus, the incentive scheme currently being prepared will target both the demand and supply sides. “Therefore, it is our responsibility, and it would be wrong for us not to fight for it,” he said.

Previously, Ministry spokesperson Febri Hendri Antoni Arif revealed that electric vehicle sales had increased significantly. The surge in sales was seen in the October–January 2025 period compared to the same period the previous year.

However, most of this increase in sales was contributed by completely built-up imported electric vehicles (EV). Of the total electric vehicle sales in 2025 of 69,146 units, around 73 percent came from imported products.

Meanwhile, the segment of domestically produced vehicles with the largest market share actually recorded a sharp decline. According to Febri, it would be wrong to conclude that the automotive industry is strong just by looking at growth in specific segments.

Currently, incentives are provided for battery electric vehicles (BEVs) in the form of import duty exemptions and zero percent Luxury Goods Sales Tax (PPnBM) as a market test. However, the benefits of these incentives are mostly enjoyed by imported electric vehicles, so that added value and labor are flowing overseas. ***