Automotive : A number of car brand holding agents (APM) are racking their brains in designing strategies to face the risk of a weakening car market in 2025 along with various challenges. The Association of Indonesian Automotive Industries (GAIKINDO) is concerned that the impact of tax option levies by local governments and the increase in Value Added Tax (VAT) to 12 percent starting in 2025 risks putting pressure on the automotive industry. Moreover, the government also increased the 2025 provincial minimum wage (UMP) by 6.5 percent.
“In 2025 there will be an increase in VAT, Tax Opsen, UMP and others. “We estimate that it will be increasingly difficult to get good sales figures,” said Chairman I GAIKINDO, Jongkie Sugiarto, Thursday 12 December 2024.
Tax opsen is an additional tax levy according to a certain percentage, based on Law No. 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments (HKPD). Regency/city governments collect opportunities from Motor Vehicle Tax (PKB), Motor Vehicle Title Transfer Fee (BBNKB). Meanwhile, the provincial government can collect opportunities from the Non-Metal Mineral and Rock Tax (MBLB).
Data from GAIKINDO shows that throughout January – November 2024, total car sales were 784,788 units. This figure is down 14.7 percent year-on-year (YoY) from the same period in 2023 of 920,518 units. Meanwhile, retail sales also fell 11.2 percent YoY to 806,721 units in the 11 month period of 2024, compared to 908,473 units in the same period of 2023.
As a result, Jongkie said that his party hopes that car sales by the end of 2024 will reach 850 thousand units. The reason is, this figure has been revised from the previous figure of 1.1 million units this year. “We hope that by the end of the year the car sales figure will reach 850 thousand units,” concluded Jongkie.
South Korean car manufacturer, PT Hyundai Motors Indonesia (HMID), revealed a strategy to boost sales amidst the risk of a weak automotive industry next year. “For Hyundai’s strategy for next year, what we can say is that of course Hyundai will continue to introduce various new product lines which we are also sure will receive a positive response,” said Hyundai Motors Indonesia Chief Marketing Officer Budi Nur Mukmin.
Throughout 2024, Hyundai will aggressively launch new models. These include the All New Kona Electric (BEV), Santa Fe Hybrid, Tucson Hybrid, and there will be a new Hyundai N Line model which will launch later this year. It is predicted that Hyundai will introduce six new models in 2025. Throughout the 11 month 2024 period, Hyundai sales will reach 20,543 units with a market share of 2.5 percent.
“We don’t know which direction interest rates and the rupiah exchange rate will go. Not to mention VAT, tax opportunities and so on, these are factors we cannot control. The factor we can control is the product we release. “We want to provide refreshment so that consumers are interested,” said Budi.
Japanese automotive manufacturer, PT Honda Prospect Motor (HPM) has a different strategy. HPM will focus on boosting sales at the end of 2024, so that consumers do not delay purchasing vehicles next year. Sales & Marketing and After Sales Director of PT HPM Yusak Billy said that the implementation of this tax could put pressure on vehicle sales due to decreasing consumer purchasing power.
“For this reason, we are preparing a sales program at the end of this year to encourage consumers not to delay purchasing vehicles until next year,” said Billy.
Honda will continue to monitor the implementation of this policy and adjust its strategy so that it can continue to provide the best solutions for consumers. Meanwhile, Honda’s retail sales (from dealers to consumers) reached 92,327 units in the January-November 2024 period. Honda’s market share is 11.4 percent.
PT Toyota Astra Motor (TAM), which is overseen by PT Astra International Tbk (ASII), is also preparing a strategy by adjusting the selling price of cars in line with the tax increase in 2025. “At the beginning of the year [2025] several of these factors will certainly influence a significant increase in car prices. “There will definitely be a significant impact on sales,” said Toyota Astra Motor Marketing Director Anton Jimmi Suwandy.
Toyota will continue to monitor the dynamics next year so that it can provide mobility solutions and price positioning that suit customer needs and capabilities. Throughout the 11 month period of 2024, Toyota Astra Motor recorded retail car sales of 268,288 units, with the largest market share of 33.3 percent. “So that the solutions provided to customers can remain competitive and answer their needs. “We also hope that there will be government support to encourage the automotive market in 2025, especially for models that have been produced locally,” said Anton.
