Economist Highlights 3 Policies That Can Help Boost Car Sales

KatadataOTO – Car sales in Indonesia have not seen significant improvement due to economic uncertainty and weakening purchasing power. As of July 2025, retail sales of new cars were 62,770 units, a slight increase from 61,687 units in June.

This achievement is also still lower than retail sales in the same period last year, which were 75,588 units.

Although many factors are at play behind the current weakening of public purchasing power, economists believe three things can be done to help revive domestic car purchases.

First is structured fiscal incentives. For example, tax relief for vehicle segments in the Rp 300 million to Rp 350 million price range with certain Local Content Level (TKDN) requirements and emission efficiency.

Photo : KatadataOTO

“A ‘trade-in bonus’ scheme to replace vehicles over 10-12 years old, refinanced from the tax uplift of new registrations. This stimulates demand without a permanent fiscal burden,” said Josua Pardede, Chief Economist at Permata Bank to KatadataOTO, on Monday (11/08).

The second step, Josua revealed, is the importance of non-fiscal affordability. For example, a lower down payment (DP) for Low Cost Green Cars (LCGC) with a slightly longer tenor.

Then, an expansion of credit guarantees for productive vehicles is needed, such as Light Commercial Vehicles (LCV) for logistics Micro, Small, and Medium Enterprises (MSMEs).

“Third, supply-side policies. Accelerate the local component supply ecosystem to contain prices, especially for Low Multi Purpose Vehicles (LMPV) or LCGCs,” said Josua.

Regional ownership costs for low-emission vehicles, including the Vehicle Title Transfer Fee (BBNKB) or Motor Vehicle Tax (PKB), need to be simplified.

Photo : Toyota

This directly targets the core of the problem, namely car prices and installments, which prevent even cheap models from reaching their target consumers due to prices being inflated by taxes and other costs.

Josua emphasized that implementing these strategies could help improve car demand in the fourth quarter of 2025 and provide a more solid footing for next year.

“Although the lower segment is likely to recover the slowest,” Josua stated.