Indah Ayu Pujiastuti, Jakarta – Indonesia's ambitious target to sell 2 million new cars annually by 2030 has drawn mixed reactions, with economists and researchers questioning its feasibility while industry leaders argue the goal remains achievable with the right policy support.
Economist Josua Pardede, chief economist at Bank Permata, described the target as highly ambitious. With new car sales estimated at around 833,000 units in 2025, the market would need to expand by nearly 19% annually for five consecutive years to reach the government's goal.
"Such growth typically only occurs when household incomes rise rapidly, credit conditions are very accommodative, and vehicle prices become increasingly affordable," Josua said.
Without strong policy intervention, Josua estimates a more realistic sales level of around 1.6 million units by 2030, positioning the 2 million-unit target as an optimistic scenario rather than a baseline forecast.
He identified three critical areas requiring reform: vehicle affordability, household income certainty, and industrial capacity. Measures such as tax simplification, incentives for mass-market and energy-efficient vehicles, and stronger local component supply chains would be key to lowering production costs, he said.
On the financing side, Josua said a stronger credit ecosystem and structured trade-in programs would be essential to encourage consumers to upgrade from used cars to new vehicles.
Similar views were echoed by Syahda Sabrina, a researcher at the University of Indonesia, who said the 2 million-unit target would be difficult to achieve without government incentives.
"Even assuming some consumers shift from used to new cars, sales in 2030 are still likely to be around 1.6 million units," she said.
Syahda noted that stagnating new car sales in recent years have largely stemmed from affordability issues. "Household incomes have not risen as quickly as car prices. Real wages have also lagged inflation, creating a widening gap between prices and purchasing power," she said.
A survey conducted by the university's Institute for Economic and Social Research (LPEM UI) involving 1,511 prospective car buyers found that nearly two-thirds initially planned to purchase used cars. When simulations assumed a 10% reduction in new car prices, around 27% of those respondents were willing to switch to new vehicles. By contrast, increases in used car prices prompted only about 15% to move toward new cars.
"This shows that lowering new car prices is far more effective in driving new car sales than raising used car prices," Syahda said.
The study also found that high resale values support new car demand. Models such as the Toyota Innova, which retains around 73% of its on-the-road price, have seen sustained sales growth as a result.
Industry optimism
The Indonesian Automotive Industry Association (Gaikindo) has taken a more optimistic view, saying the government's target remains attainable within the remaining years of the decade.
"We still have four years to reach 2 million units. It is achievable, provided we implement sufficiently bold policies," said Gaikindo Secretary General Kukuh Kumara.
Retail sales of new cars totaled 833,692 units in 2025, down 6.3% year on year, according to Gaikindo data.
Kukuh pointed to the rapid expansion of the used-car market, estimated at around 1.6 million units annually, as a structural challenge. While used-car transactions offer limited economic value, new car sales generate investment, employment, and tax revenue, he said.
"The key is affordability. One long-term option worth studying is simplifying the vehicle tax structure," Kukuh said, without providing details.
He also warned Indonesia against losing momentum as Southeast Asia's automotive manufacturing hub, citing factory closures in Thailand as a cautionary example. If vehicle prices remain high and domestic demand weakens, manufacturers could shift investment elsewhere, he said.
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"Indonesia is already self-sufficient in both passenger and commercial vehicles. Our production capacity can reach 2.5 million units per year," Kukuh said.
Rather than requiring every new entrant to build its own factory, Kukuh said partnerships, joint ventures, and better use of existing capacity could help optimize investment, as long as production remains domestic.
Kukuh added that achieving the 2 million-unit target would likely require stronger economic growth. "The target is attainable, provided economic growth reaches 6-7%," he said.
Jap Ernando Demily, marketing director of Toyota Astra Motor, said the 2030 sales target had been envisioned even before the COVID-19 pandemic, but acknowledged that current conditions make it harder to achieve.
Macroeconomic uncertainty and prolonged stagnation in purchasing power continue to weigh on market recovery, he said, underscoring the importance of policy intervention to revive demand.
"While Toyota does not set a specific sales target, we certainly hope market performance will improve compared with this year," Ernando said.
He added that government incentives would play a crucial role in accelerating recovery, particularly for locally produced vehicles, including electric cars. Well-targeted incentives could help lower prices, improve affordability, and speed up the adoption of new technologies, he said.