JAKARTA— The Association of Indonesian Automotive Industries (GAIKINDO) has revealed several challenges facing the automotive market in 2026. GAIKINDO Secretary General Kukuh Kumara stated that automotive industry players are currently under pressure from declining purchasing power. It requires consistent government policies to help improve the purchasing power for four-wheeled vehicles.
“The challenge is policy certainty. The automotive industry needs consistent, long-term policies,” said Kukuh on Thursday, 22 January 2026.
Another crucial factor is the annual trend of rising vehicle prices, which is not matched by growth in average income. This situation has created a wide gap between consumer purchasing power and vehicle prices.
“Purchasing power also needs to be boosted, because car prices have increased by 7.5 percent, but potential buyers have only increased by three percent. So the gap is widening over time,” he said.
Improving the performance of the automotive industry also depends on accelerating economic growth. As long as the economy remains around five percent, as it was in 2025, conditions will tend to stagnate. National gross domestic product (GDP) performance fluctuated significantly throughout 2025. In the first quarter of 2025, the Indonesian economy grew by 4.87 percent, then increased to 5.12 percent in the second quarter of 2025. However, the growth rate stumbled again to 5.04 percent in the first quarter of 2025.
“The government is targeting economic growth to increase to six percent by 2026. If this target is achieved, it will begin to drive a recovery in demand and increase vehicle production activity,” said Kukuh.
GAIKINDO data show that wholesale car sales from January to December 2025 reached 803,687 units. This figure decreased 7.2 percent year-on-year (YoY) compared to the same period in 2024, which reached 865,723 units. Meanwhile, retail sales (from dealers to consumers) reached 833,692 units, a 6.3 percent decrease compared to 889,680 units in 2024.
GAIKINDO remains optimistic about the prospects for a recovery in the national automotive market in 2026. This optimism is driven by the commencement of local electric vehicle production by several manufacturers, including BYD, Vinfast, and Geely, in accordance with the domestic component level (TKDN) regulations. (BISNIS)
