Japanese automakers are increasing sales efforts in Indonesia to improve their competitiveness against Chinese rivals, following the government's decision to end import duty exemptions for electric vehicles.

Japanese manufacturers have described the policy shift as a "turning point" in their efforts to attract buyers in Southeast Asia's largest economy.

In 2024, the government introduced an incentive programme exempting companies that committed to future domestic production from import tariffs and luxury taxes on fully built-up imports. The programme expired at the end of 2025. Several Chinese companies, which benefited from the policy, have indicated that vehicle prices will need to increase as a result.

Japanese manufacturer Honda has announced a 5% price reduction on the hybrid version of the CR-V sport utility vehicle. The model, which previously retailed at approximately IDR 813 million (US$ 48,000), is now priced at IDR 775 million.

Ryo Asaoka, Sales and Marketing Director at Honda Prospect Motor, stated on the sidelines of the 11-day Indonesia International Motor Show, which opened in Jakarta on 5th February, that the government's termination of the incentive measures "will likely be a major turning point" for Japanese car brands.

"We want to open the door wider for the CR-V," he said.

The auto show, held this year one month before the Eid al-Fitr holiday at the end of Ramadan, is "creating more business potential than year-end sales", Asaoka said. Honda anticipates increased demand for new vehicles for homecoming journeys and leisure activities during the Islamic holiday season.

Suzuki Motor has commenced sales of its fully electric eVitara model at the motor show. Although its launch was announced last July, the official price was disclosed and pre-orders were accepted for the first time at the event.

The eVitara is priced from IDR 755 million. "Tangible initial sales momentum will become clear, going forward," said Ei Mochizuki, General Manager at Suzuki Indomobil Sales. He further added that Suzuki intends to promote the model alongside the Bronx hybrid, priced in the IDR 200 million range. That model competes with Chinese EVs.

Mitsubishi Motors is set to introduce its first hybrid model in Indonesia this year, although details regarding the model and pricing have not yet been disclosed. Takahiko Iida, Marketing Manager at Mitsubishi Motors Krama Yudha Sales Indonesia, stated that the petrol-powered Destinator, a seven-seater launched last July in the IDR 400 million to IDR 500 million range, has been introduced to the market.

"The weakness of [EVs] is their tendency to lose resale value quickly, which is also important in this country," Iida said. "While [petrol and diesel-powered] vehicles drop to 70% [of their original value] after three years, [EVs] drop to 30%."

The end of government incentives for imported vehicles therefore "seems likely to create a certain swing back from the previous bias" towards EVs, Iida added.

Chinese EV manufacturer BYD is preparing for potential price increases. A sales representative at BYD's booth at the show informed visitors that the price of its four-seater hatchback, the Atto 1, currently around IDR 199 million, "will likely increase by IDR 30 million as early as March", citing the expiration of the government incentives. He further stated that the seven-seater M6 van, which starts at IDR 383 million, "will see a price increase of around 20%, depending on the model."

Toyota's multipurpose Kijang Innova is priced from IDR 417 million.

According to the Association of Indonesia Automotive Industries, 59% of electric vehicles sold in the country last year originated from China.

Alloysius Joko Purwanto, an energy economist at the Economic Research Institute for ASEAN and East Asia, stated that price increases for EVs "create a clear business opportunity" for Japanese automakers "by producing and selling hybrid propulsion".

Although the growth of hybrids has been slower than that of heavily subsidised EVs, Purwanto noted, "Incentives cannot be given eternally, and now we will see competition between the different car propulsion types on a more level playing field."

However, he emphasised, "It will be very difficult for Japanese automakers to produce [EVs] at a competitive selling price compared with other [EVs] that already exist in the Indonesian market."

He concluded that, for Japanese car brands, "Incorporating [hybrids] and plug-in hybrids in their [strategies] as a bridging technology might be a crucial and smart move to make."