{
    "success": true,
    "data": {
        "id": 1638009,
        "msgid": "indonesian-automotive-industry-thrives-amid-global-challenges-1774590681",
        "date": "2026-03-27 08:07:50",
        "title": "Indonesian Automotive Industry Thrives Amid Global Challenges",
        "author": " ",
        "source": "GALERT",
        "tags": "",
        "topic": "Economy",
        "summary": "The Indonesian automotive sector remains dynamic despite global pressures, as highlighted at the Indonesia International Motor Show in early 2026, with the industry employing nearly 100,000 workers and attracting Rp 194.22 trillion in investments in 2025, contributing 1.28% to the national GDP. Challenges include global supply chain vulnerabilities in rare earths, semiconductors, and lithium, alongside domestic issues like declining new car sales due to affordability, leading to a shift towards used vehicles and potential job losses in components manufacturing. To build resilience, the sector must strengthen local supply chains, adapt to electrification transitions with a focus on hybrid vehicles, and leverage its established manufacturing foundation for export growth and regional innovation.",
        "content": "<p>The Indonesia International Motor Show (IIMS) in early February 2026\nonce again demonstrates that Indonesia\u2019s automotive sector remains\ndynamic. Industry Minister Agus Gumiwang Kartasasmita emphasised the\nimportance of this industry in creating added value, absorbing labour,\nand strengthening domestic investment. In 2025, the automotive industry\nrecorded direct employment of around 99,700 workers with total\ninvestments reaching Rp 194.22 trillion. Agus stated, \u201cThis contribution\nhas proven effective in strengthening the domestic manufacturing\nstructure,\u201d as reported by Kompas.id on Thursday (5\/2\/2026). The\nautomotive sector also plays a significant role in the national economy.\nThis industry contributed 1.28% to gross domestic product (GDP) in the\nthird quarter of 2025, and an average of 7.6% to non-oil and gas\nmanufacturing GDP over the past five years, cited from the Indonesian\nAutomotive Industry Association (GAIKINDO) website. Behind its positive\ncontributions, Indonesia\u2019s automotive industry faces various challenges,\nboth global and national. Globally, one of the main issues is energy\ndominance. China controls about 70% of the world\u2019s rare earth production\nand 90% of its refining. Meanwhile, global lithium demand is projected\nto increase 3.5 times by 2030 and 6.5 times by 2034. Another pressure\ncomes from the semiconductor supply chain. Chips are essential\ncomponents in modern vehicles, but geopolitical tensions make their\nsupply vulnerable. Purchasing Power Restrains New Car Market In addition\nto global pressures, Indonesia\u2019s automotive industry faces issues in the\ndomestic market, where the main challenge is affordability, no longer\njust buying interest. A study by the Institute for Economic and Social\nResearch at the Faculty of Economics and Business, University of\nIndonesia (LPEM FEB UI), released in early 2026, shows a significant\ndecline in new car sales, from a peak of around 1.22 million units in\n2013 to about 866,000 units in 2024. The used car market share reached\n67.5% in 2024, surpassing the new car share of only 32.5%. This data\nindicates a shift in the automotive market. Consumers tend to delay\npurchases or switch to used cars due to the increasingly unaffordable\nprices of new cars. Therefore, the challenge for the automotive sector\nis not only to increase sales but also to expand the new car market\nhindered by affordability issues. Impact of Weakening New Car Market\nAccording to a Kompas.com report on Thursday (4\/9\/2025), the decline in\ncar sales has led to efficiency measures and layoffs (PHK) in the\nautomotive sector, particularly in the components industry. The\nweakening new car market directly impacts the components industry and\nother supporting layers. Every correction in the vehicle market affects\nsupplier companies behind the main manufacturers. When the car market\nslows, the sustainability of the industrial network, workforce, and\nproduction capacity built over years is at stake. Local Supply Chain as\nthe Key The strength of the local supply chain is key to bolstering\nIndonesia\u2019s automotive components industry. The automotive sector must\nbe viewed as a long production network, not just the finished vehicle\nindustry. The Indonesian Automotive Parts and Components Industry\nAssociation (GIAMM) stated in a Kompas.com report on Wednesday\n(4\/2\/2026) that one vehicle is supported by around 25,000 individual\ncomponents and thousands of companies in the supply chain, from raw\nmaterial suppliers to the machinery and tools industry. The resilience\nof the automotive industry is determined by the depth of domestic\nproduction bases. The stronger the local suppliers, the lower the\ndependence on imports, and the greater the industry\u2019s chances of\nsurvival. Technology Transition Cannot Be Delayed The automotive\nindustry cannot delay the transition to electrification, even though the\nnew car market remains constrained. Data from the Ministry of Industry\nshows an increase in the share of hybrid electric vehicles (HEV) and\nbattery electric vehicles (BEV). However, BEV growth is still largely\nsupported by imports during the incentive phase. The LPEM FEB UI study\nshows that the portion of completely built up (CBU) in BEV sales has\nrisen significantly. In 2026, the main issue is how the automotive\nsector undergoes a technology transition to reduce emissions without\nweakening domestic manufacturing, as well as efficient utilisation of\nresources to support electrification. HEV becomes a more realistic\noption because it is built on the existing internal combustion engine\n(ICE) industry foundation, so the transition does not immediately break\nthe old industrial chain. Industry Foundation Already Formed Indonesia\u2019s\nautomotive industry has a manufacturing track record that has grown\nthrough a long process. Indonesia continues to strengthen its position\nas an automotive production base in the region. PT Motor Manufacturing\nIndonesia (TMMIN) serves as an example illustrating this process,\nstarting from vehicle assembly, body plants, engine plants, component\nlocalisation, to export development. Investments continued despite\nIndonesia facing the 1997 monetary crisis and the 1998 political crisis.\nTMMIN\u2019s export achievements, with a cumulative 3 million complete\nvehicles to 100 countries, demonstrate the competitiveness of\nIndonesia\u2019s automotive industry in the global market, as cited from\nKompas.id on Wednesday (10\/10\/2025). The government wants to encourage\nIndonesia not only as an export base but also as an automotive\ninnovation centre for the Global South region. The pressures faced in\n2026 show that the resilience of Indonesia\u2019s automotive industry stems\nfrom its ability to adapt during difficult situations. In 2026,\nIndonesia\u2019s automotive industry needs to rely on three things: keeping\nthe domestic market moving, deepening the local supply chain, and\npursuing a realistic technology transition. Indonesia\u2019s automotive\nindustry still has the capital to survive, but it needs to maintain\nsales, k<\/p>",
        "url": "https:\/\/jawawa.id\/newsitem\/indonesian-automotive-industry-thrives-amid-global-challenges-1774590681",
        "image": ""
    },
    "sponsor": "Okusi Associates",
    "sponsor_url": "https:\/\/okusiassociates.com"
}