Dealership Closures Emerge One by One: Here's the Culprit

A phenomenon of automotive dealership closures has recently come under scrutiny. However, the industry assesses that the main issue is not with the brands, but rather the weakening purchasing power of the public.

General Secretary of the Indonesian Automotive Industry Association (Gaikindo) Kukuh Kumara revealed that sales have declined across the board in the national automotive market. This situation is compounded by the entry of new players into the market.

“It’s clear that sales are declining overall. Meanwhile, on the other hand, there are many new players entering as well,” he told CNBC Indonesia on Tuesday (7/4/2026).

Nevertheless, Kukuh emphasised that this decline is not related to the strength of specific brands.

“The decline is not due to brand problems, but more inclined towards the decreasing purchasing power,” he said.

This situation directly impacts the sustainability of dealership businesses in the field. Without strong demand, operations become difficult to maintain.

“Yes, purchasing power must recover first. We can’t keep the shop open if no one buys. It’s impossible to continue production if there’s no one buying,” he asserted.

This condition is also influenced by price increases stemming from production cost pressures such as raw materials and energy. These price hikes further strain consumers’ ability to purchase new vehicles.

On the other hand, market structure changes with the entry of new players have heightened competition. This requires dealerships to adapt with more aggressive strategies to survive.

However, Kukuh believes recovery still depends on the primary factor, namely public purchasing power.

“If purchasing power hasn’t recovered, the industry will also struggle to grow again,” he stated.