The condition of the new car market in Indonesia throughout 2025 has been challenging, prompting the Ministry of Industry (Kemenperin) to propose incentives for 2026.

However, the Coordinating Minister for Economic Affairs (Menko Perekonomian), Airlangga Hartarto, emphasised that no incentives for the automotive industry will be provided in 2026.

The Ministry of Industry stated that the national automotive sector requires intervention in the form of incentives to support the ecosystem from upstream to downstream.

Such measures are intended to maintain production utilisation, protect investment, prevent potential layoffs, and sustain the competitiveness of domestic products amid changing market dynamics.

The Ministry noted that sales of electric vehicles (EVs) increased between October 2024 and January 2025. Nevertheless, this growth was primarily driven by imported models.

Ministry of Industry spokesperson Febri Hendri Antoni Arief stated on December 2nd, "It is incorrect to claim that the automotive industry is in a strong condition solely based on growth in specific vehicle segments. The current situation reflects challenges in domestic vehicle demand."

He added, "This reflects the current state of the national automotive industry. Incentives are needed to address this situation."

Febri also stated that the proliferation of automotive exhibitions does not indicate industrial strength. Many exhibitions reflect attempts by industry players to maintain demand amid a declining market.

"The number of automotive exhibitions across Indonesia is not an indicator of industry size. They reflect efforts to sustain demand while protecting workers from layoffs," he explained.

Febri indicated that the current conditions may reduce factory utilisation, disrupt investment flows, and affect job security.

"The absence of policy intervention could exacerbate these pressures and impact the industrial structure," he said.

Support for government incentives has also come from the automotive community. Sonny Eka Putra, founder of the Xpander Mitsubishi Owners Club (X-MOC), stated that incentives should be targeted according to the needs of each segment.

"Incentives are particularly necessary for lower- and middle-class vehicles. Provision for upper-segment vehicles should not be obligatory," he noted.

The Ministry of Industry stated that future incentives will focus on the lower- and middle-class segments and will be based on the TKDN (local content level) value. This policy aims to support purchasing power, stabilise the industrial environment, and maintain workforce continuity in the national automotive sector.