Indonesia’s automotive industry undergoes restructuring as exports grow amid declining domestic demand

Over the past year, Indonesia’s domestic car market has faced a noticeable downturn. Wholesale vehicle sales fell by 7.2%, while retail sales declined by 6.3%, reflecting not only weaker consumer demand but also broader economic pressures, including slower income growth and rising loan interest rates. Despite this contraction, exports have become the key stabilizing factor for the country’s automotive industry, offsetting losses in the internal market.

According to official data, exports of completely built-up (CBU) vehicles increased by 9.7% in 2025, reaching 518,000 units, compared to 472,000 units in 2024. This growth was driven by stronger demand in overseas markets and the implementation of government support programs aimed at manufacturers focused on export-oriented production.

A central role in this shift is being played by both local Indonesian manufacturers and international automakers that have established production facilities in the country. These companies are increasingly leveraging Indonesia as a strategic manufacturing base for global distribution.

Indonesia continues to position itself as a key automotive production hub in Southeast Asia, benefiting from its favorable geographic location, competitive labor costs, and steadily improving infrastructure. These advantages are attracting foreign investors seeking to optimize export logistics to regions such as the Middle East, Africa, and Latin America, reinforcing the country’s growing importance in the global automotive supply chain.