JAKARTA - The Low Cost Green Car (LCGC) segment, which used to be the backbone of the national car market, is now starting to lose momentum. Throughout 2025, the performance of this environmentally friendly cheap car decreased.
In data reported by the Indonesian Motor Vehicle Industry Association (Gaikindo), the decline in the distribution of LCGC cars reached 31 percent compared to the previous year. The total distribution of LCGC only reached 122,686 units in wholesales during 2025.
In fact, in the first quarter of last year, this segment had shown solid performance with an average of over 12 thousand units per month. However, entering the second quarter to the end of the year, the figure declined and remained in the range of 8-9 thousand units per month.
Pressure is also seen from the retail sales side, LCGC was recorded to have sold 130,799 units throughout 2025. This figure is down 27 percent compared to the 2024 achievement which is still at the level of 178,726 units.
Deputy President Director of PT Toyota-Astra Motor (TAM) Henry Tanoto, revealed the main cause of the weakening of the LCGC market. According to him, the decline is related to the condition of the financing industry because the majority of consumers in this segment are first car buyers who rely heavily on credit schemes.
"So, of course, the customers in LCGC are the first customers. So we see that last year there were also issues in financing such as NPL (Non-Performing Loan) which increased in the financing industry," said Henry Tanoto in South Jakarta, not long ago.
The increase in the ratio of bad loans has made financing companies more selective in distributing motor vehicle loans. This situation also puts pressure on people's purchasing power, especially those who target cars in the affordable segment.
"So this feels like it may also affect our first buyers to be able to have vehicles in the LCGC segment," he said.
However, Henry hopes that the market pressure that occurred throughout last year is at its lowest point. He is optimistic that economic conditions will gradually improve so that the automotive industry can start to grow again.
"Hopefully last year was the bottom for the market. We all hope to see this year and next year it can be better. So hopefully it can also apply to the LCGC segment," he added.
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