Honda Keeps a Close Watch on the Impact of Middle East Geopolitics

JAKARTA, KOMPAS.com – PT Honda Prospect Motor (HPM) continues to monitor the escalation of the conflict in the Middle East and its potential spillover effects on the national automotive industry in 2026. Yusak Billy, Sales & Marketing and After Sales Director of HPM, said that to date the tension between Iran and Israel, which also involves the United States, had not yet had a direct impact on car sales in Indonesia. ‘Regarding the conflict in the Middle East, we are continuing to monitor how it develops. So we cannot yet conclude whether it will affect purchasing power or not. But so far there has been no significant impact,’ Billy said in Jakarta on Tuesday (3/3/2026). If it were to widen, the situation could again cause disruptions in the distribution of components, including semiconductors, which had previously disrupted vehicle production. Domesticly, the more pressing challenge at the moment stems from weakening purchasing power, especially among the middle class. This condition affects demand for new vehicles and makes financing companies more selective in extending credit amid rising non-performing loan (NPL) ratios. ‘Purchasing power is indeed weakening. Therefore we are collaborating with financing institutions so that consumers, especially in the LCGC segment and the lower-middle, still have easier access to own a vehicle,’ Billy said. Amid these dynamics, HPM emphasises that this year’s strategy focus is not solely to chase sales volume, but to strengthen long-term relationships with customers. Currently, Honda has more than 1.2 million customers in Indonesia. The base is considered foundational for building a sustainable relationship throughout the vehicle ownership cycle. ‘For us, this is the meaning of Connecting Moment, namely building relationships that do not end when purchasing the first car, but continue while customers use Honda,’ said Watanabe. In terms of performance, data from the Gabungan Industri Kendaraan Bermotor Indonesia (Gaikindo) shows Honda’s wholesale sales for January–December 2025 at 56,500 units. The achievement placed Honda in fifth nationally, but down about 40 percent year on year. Retail sales were 71,233 units, down 30 percent from 2024’s 103,023 units. Throughout 2025, retail distribution was higher than wholesale as part of stock adjustments in a slowing market. As part of strategic adjustments, Honda is also preparing to expand its electrification lineup in 2026. Three new models will be launched, consisting of two hybrids and one battery electric vehicle (BEV). ‘We will add two hybrid models and one BEV in 2026. We will not only broaden the electrification lineup, but also ensure Honda’s distinctive character remains strong in this new era,’ Billy said.