The Association of Indonesian Automotive Industries (GAIKINDO) reported sales of four-wheeled dealers surged 72.6 percent to 84,910 units in March after the implementation of tax incentives by the government - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – The Association of Indonesian Automotive Industries (GAIKINDO) reported car sales surged 72.6 percent to 84,910 units in March compared to a year ago, after the manufacturer get tax incentives from the government. In February the automaker sold 49,202 units and 76,811 units in March 2020.

Of the total sales, major car producer, PT Astra International Tbk (IDX: ASII), sold 45,521 units from previous month 26,502 units. The other producer, Mitsubishi disposed 13,088 units, Honda 11,350 units, Suzuki 8,669 units, Nissan 85 units, and others 6,197 units in the same month.

However, the cumulative car sales in the first quarter (1Q) of this year are still a little depressed compared to last year. During the first three months of 2021, four-wheeled wholesalers won 187,021 units, dropped 21.1 percent compared to 1Q of 2020. In the same period, the retail sales were recorded at 178,450 units, fell 18.7 percent when compared to the 1Q of 2020, which recorded 219,366 units.

As known, the government officially gave a 100 percent of luxurious tax discount starting March 1 until May 2021. Then, in June to August the government will bear 50 percent of the tax discount and September – November to 25 percent. This incentive applies to passenger vehicles with a maximum capacity 2,500 cc and below and produced in Indonesia with 70 percent of local content.

In this year, GAIKINDO is optimistic that new car sales could reached 750,000 units compared to last year only 578,327 units. Beside fuel-based car production, to support the automotive sector, the government also looking an electric car production.

The Industry Ministry is targeting to produce 600,000 units of electric cars and 2.45 million units of battery-powered motorcycles in 2030 and its expecting be able to reduce CO2 emissions from cars by 2.7 million tones and motorcycles by 1.1 million tones. According to the minister, Agus Gumiwang Kartasasmita, three local companies have built facilities to produce battery-powered electric vehicles, with a combined production capacity of 1,480 units per year.

To push the production, the government is providing fiscal and non-fiscal incentives to consumers as well as manufacturers. He also announced, the manufacturers get tax holiday, mini tax holiday, tax allowance, import duty exemption, and super tax deduction for research, development, and demonstration.

Kartasasmita revealed, the automotive industry is one of the key sectors contributing significantly to the national economy. Right now, more than 24 wheeled vehicle manufacturers are operating in Indonesia. The ministry of finance considered to give tax holiday in 10 years period to the new investors, especially in the electric vehicle (EV) sectors.

The stimulus is applies to investor who want to build an electric car factory in Indonesia with a minimum investment value of Rp5 trillion (US$342.46 million). The new policy announced by the director general for tax at the ministry, Suryo Utomo, on March 15. He said, for full battery electric cars, the luxurious tax remains zero percent and for the hybrid cars are proposed to have a tax rate of 5 percent.

While, head of the fiscal policy agency, Febrio Kacaribu, explained that these incentives is given by the government to boost the sales and production of electric cars in the country. He explained, that other countries that provide incentives to boost electric car sales are China, Japan, England, and Germany.

The government also targeting to export 1 million cars by 2025 from this year target 340,000 units Therefore, the government is determined to create a conducive business climate through harmonization and synchronization of regulations in the automotive sector.

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