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

According to him, this policy needs to be applied to all types of vehicles, whether electric, hybrid, or conventional.

In parallel with that, a reduction in VAT also has the potential to help people switch to environmentally friendly vehicles. Because their prices can become more competitive.

“In any country, the respective governments step in to help their people make the switch,” he asserted.

Indeed, currently, electric cars that meet the requirements receive a 10 percent VAT incentive from the government. Meanwhile, hybrid cars get three percent.

Photo : Courtesy

However, if you look at it, the price tag for electric cars remains relatively high. This includes MPV (Multi-Purpose Vehicle) models that are in high demand by the public.

Therefore, Bebin stated that the proposal to reduce the VAT percentage is one of the keys to revitalizing the national automotive industry amidst various challenges.

“That for (cars) priced below IDR 1 billion, the VAT should be six percent. I am sure the automotive sector's revival will be felt,” said Bebin.

National Car Sales for the First Quarter of 2025

Photo : KatadataOTO

As of March 2025, data from Gaikindo (Association of Indonesian Automotive Industries) recorded wholesales of 70,892 units, down from February 2025's achievement of 72,336 units.

When compared to the same period last year, the figure also experienced a decline. 

For comparison, car wholesales in March 2024 reached 74,720 units.

Then, in terms of retail (distribution from dealer to consumer), car sales in the first quarter (January-March 2025) were 205,160 units. In the same period last year, the achievement was 215,250 units.