Vehicle Tax, One of the Causes of High Car Prices in Indonesia

KatadataOTO – A decline in vehicle purchasing power continues to be felt in the country's automotive industry. There are various factors at play behind it.

The Association of Indonesian Automotive Industries (Gaikindo) highlights one of the contributing factors, namely motor vehicle tax.

However, according to Gaikindo, the Indonesian people still have a desire to own motor vehicles. 

“The Toyota Avanza is sold in Indonesia and exported, including to Malaysia. In Indonesia, the annual tax is almost IDR 5 million,” said Kukuh Kumara, General Secretary of Gaikindo in Tangerang, Thursday (31/07).

Photo : KatadataOTO

However, according to Kukuh, in Malaysia, a similar model, the Toyota Avanza, has an annual tax of around IDR 500,000 in rupiah currency.

He believes that the high vehicle tax rates also cause domestic motor vehicle sales to stagnate.

“This is what we must look at. We are currently under pressure, we cannot let it continue,” Kukuh emphasized.

In addition to supportive government policies, Kukuh stressed the importance of many related parties making car prices affordable again for many people. So that the industry can return to normal.

He further emphasized that the automotive industry involves many parties. So it needs serious attention, especially from the government.

Some time ago, a number of Japanese manufacturers were urged not to carry out layoffs (PHK) amidst the challenges in the automotive industry.

“We have to save it, because at the end of the line there are Micro, Small, and Medium Enterprises (MSMEs). Indonesia's automotive industry has a very broad impact,” said Kukuh.

For your information, the wholesales figure, or distribution from factory to dealer, for cars throughout June 2025 was 57,760 units, down 4.7 percent from May 2025's 60,613 units.

Photo : Courtesy

Meanwhile, year-on-year, the figure for June 2024 was 74,615 units. That achievement fell by 22.6 percent in 2025.

However, Gaikindo has set a wholesales target of 750 thousand to 900 thousand units by the end of 2025.

The GIIAS 2025 event is expected to boost sales figures and attract public interest in purchasing four-wheeled vehicles.