Automotive Industry Experiences Stagnacy For 10 Years, Minister Of Industry Agus Explains The Cause

Minister of Industry (Menperin) Agus Gumiwang Kartasasmita said the auto industry was experiencing stagnation in the last 10 years. In fact, the automotive industry is one of the strategic sectors that contributes significantly to the national economy.

"However, in the last 10 years, we have found conditions that domestic sales of cars in Indonesia still tend to last at 1 million units," said Minister of Industry Agus in his remarks read by the Acting Director (Plt) Director General of Metal, Machinery Industry, Trasnportation and Electronics Equipment (ILMATE) Putu Juli Ardika in a media discussion on Solutions to Overcome Car Market Stagnation at the Ministry of Industry office, Jakarta, Wednesday, July 10.

Minister of Industry Agus also revealed a number of causes related to the issue. He said, based on academic studies from LPEM UI, the stagnation in car sales in Indonesia was influenced by the weakening purchasing power of the Indonesian people.

"This causes people who cannot buy new cars to switch to buy used cars," he said.

In addition, Agus said that there was an increase in interest rates which caused people to be reluctant to buy new cars.

In overcoming this, Agus said, a program is needed to stimulate the purchase of new cars in the community. First, providing fiscal incentives in the form of a Sales Tax on Government-borne Luxury Goods (PPnBM DTP) program for domestically produced vehicles.

"The provision of incentives is given to vehicles with certain local content or TKDN requirements and prioritizes low-carbon emission vehicles to continue to prioritize our common target, namely advancing the domestic component industry and creating the net zero emission (NZE) industry," he said.

Support related to interest rate control can also be one of the government's steps to give triggers to the public so they can buy new four-wheeled vehicles.

"Regarding the decrease in people's purchasing power, easing interest rates for the purchase of new cars on credit can be an option to restore public interest in being able to buy new cars," he said.

Furthermore, Agus continued, to reduce environmental impacts and increase the level of security in the use of vehicles in line with efforts to increase sales of new cars in the country, the government can impose special regulations regarding restrictions on the age of using cars in certain areas.

"With the implementation of these efforts, it is hoped that there will be stimulation that can increase the number of new car sales in Indonesia," he added.

For your information, in 2021-2022 there will be a surge in sales which is influenced by the implementation of the Government-borne Luxury Goods Sales Tax (PPnBM DTP) program.

In the course of the implementation of the PPnBM DTP program, sales performance for the period March to December 2021 recorded an increase of 113 percent from the same period in the previous year. Meanwhile, in 2022, the program succeeded in increasing sales from January to May to 95,000 units.