Indonesia's Car Sales Down in Q1, Analysts Propose VAT Cut

KatadataOTO – Wholesales figures (distribution from factory to dealer) for four-wheeled vehicles were still sluggish in the first quarter of 2025.

There are many factors influencing the slowdown of car sales in 2025. At the start of this year, there was the implementation of the PKB surcharge (Tax on Motor Vehicles) and BBNKB (Motor Vehicle Title Transfer Fee).

Although a number of regional governments have implemented reliefs, the discourse had caused many people to postpone their purchases.

In addition, there was an increase in VAT (Value Added Tax) to 12 percent. Car prices were again affected by this regulation.

Photo : KatadataOTO

“VAT is increasing to 12 percent. Will the VAT for both EV and conventional vehicles not also increase? Yes, it will increase,” said Bebin Djuana, an automotive observer, when contacted by KatadataOTO recently.

He sees that the automotive industry will struggle to recover if the government does not take new steps. One of them is by reconsidering the VAT percentage.

Bebin further gave an example of a VAT amount that could ease the burden on consumers and hopefully boost purchasing power again.

“For example, for vehicles above IDR 2 billion, let the VAT be 10 percent. For those below IDR 2 billion or IDR 1 billion, it should be six percent,” said Bebin.