Indonesia’s Auto Industry Ramps Up Exports to Offset Sluggish Home Market

As of mid‑2025, Indonesia’s automotive sector is witnessing a compelling shift: exports are rising sharply to counterbalance a sluggish home market. This strategy is transforming Indonesia into a growing export hub—especially for combustion, hybrid, and electric vehicles.

1. Domestic slowdown: sales contract despite recovery signs

• In 2024, wholesale car sales dropped nearly 14 percent, from an expected 1.1 million units to around 865,700 units, amid weakening consumer purchasing power and rising interest rates.
• Through the first six months of 2025, retail sales declined 9.7 percent year-on-year: totaling roughly 390,000 units, down from 432,000 units in the same period in 2024.

Although there’s cautious optimism heading into late 2025, consumer demand remains soft, held back by economic headwinds and persistent uncertainty.

2. Export push: accelerating growth in 2025

• Exports of fully built-up (CBU) vehicles rose 3.4 percent in Jan–Feb 2025 compared to early 2024, totaling 70,212 cars.
• GAIKINDO data shows cumulative CBU exports through June 2025 reached 233,648 units, a 7 percent increase over H1 2024’s figure of 218,459 units.
• In mid-2024, Indonesia already showed consistent export growth: western statistics agency BPS reported car export values rising from US$3.39 bn in 2021 to US$6.12 bn by end‑2023, including US$2.78 bn of exports in H1 2024.

Destinations: The Philippines leads (about 28 percent of export volume), followed by Vietnam (~16 percent) and Saudi Arabia (~15 percent).

3. Hybrid and EV exports: a fast-rising niche

• Hybrid exports through Q1 2025 jumped 14.5 percent year-over-year. Toyota’s Innova Zenix and Yaris Cross hybrids—manufactured in Karawang—led the exports, commanding strong local content (70–80%) and reaching markets from the Philippines to Latin America.
• Major global EV investments are underway: Chinese OEM BYD is building a US$1.3 b plant in Subang, aiming for 150,000 units annually and export-first output by late 2025.
• Hyundai and LG Energy Solution have launched Indonesia’s first battery-cell manufacturing plant in Karawang, supporting EV exports beyond the domestic market.

4. Why exports—government strategy meets industry realignment

• With domestic demand soft, boosting exports helps stabilize output and employment across the supply chain.
• Strategic government incentives—like VAT reductions, luxury‑tax exemptions for EVs, and import-duty waivers—encourage manufacturers to export more, especially right-hand drive EVs produced by Chinese and domestic brands.
• Indonesia is positioning itself as an export hub, particularly for right-hand-drive markets across Africa, Asia, and Latin America.

5. Key Philippines: export flashpoint

• In H1 2024 and beyond, 1 of every 4 cars exported went to the Philippines.
• Models like Toyota Avanza, Mitsubishi Xpander, and Hyundai Creta dominate export flows: Avanza logged over 3,000 units shipped to the Philippines in early 2025, Xpander and Creta followed closely to Vietnam and Middle Eastern destinations.

6. Charting the road ahead: outlook for 2025 and beyond

• GAIKINDO reports expect 900–950k wholesale unit sales by end‑2025 if conditions remain stable.
• However, global trade risks like U.S. tariffs on Indonesian exports and stiff competition from Chinese OEMs remain notable challenges.

✍️ Conclusion: Export momentum fills the gap at home

Indonesia’s auto industry is embracing a bold export-led recovery path. While domestic car sales remain depressed, a mix of rising CBU exports, surging hybrid shipments, and accelerating EV plant investments are helping to keep production lines humming and local jobs afloat.

Local champions such as Toyota, Mitsubishi, Hyundai, and emerging EV players like BYD and VinFast are maximizing export channels—from ASEAN neighbors to the Middle East and Latin America. Government incentives, local‑content mandates, and strategic foreign partnerships reinforce Indonesia’s ambition to become a regional EV export hub by 2030.