Assessing the Effectiveness of Hybrid Car Incentives in Boosting Sales

KatadataOTO – The government is providing assistance or subsidies for electric and hybrid cars in Indonesia to boost sales and accelerate the adoption of environmentally friendly vehicles in the country.

For electric cars, the incentive is a 10 percent tax reduction, while for hybrid cars it is three percent. It should be noted that four-wheeled vehicles are included in goods subject to a 12 percent VAT (Value Added Tax).

At the beginning of the implementation of the hybrid car incentive, a Japanese brand in Indonesia, namely Toyota, admitted to experiencing an increase in sales figures for the subsidized model, the Kijang Innova Zenix Hybrid.

Due to the impact of the hybrid car incentive, the selling price of the car can be cut by up to Rp 10 million or more. The hope is that this can attract public interest in switching to HEVs (Hybrid Electric Vehicles).

Photo : TAM

However, the question arises whether incentives for environmentally friendly vehicles can be a long-term solution, especially amidst the weakening purchasing power seen since 2024.

From an observer's point of view, the hybrid car incentive is considered very effective in stimulating the growth of automotive sales in the country.

“Especially if fuel prices rise, many will shift to hybrids,” said Riyanto, an automotive observer from LPEM (Institute for Economic and Social Research) to KatadataOTO some time ago.

The performance of hybrid cars, assisted by an electric motor and an additional small-capacity battery, is claimed to help improve fuel efficiency.