At Gaikindo Indonesia International Auto Show (GIIAS) 2025, automakers unleashed massive discounts in a high-stakes bid for market share. While cheap cars woo buyers, industry leaders warn that uncontrolled price battles—especially in the booming electric vehicle segment—may threaten the automotive ecosystem’s long-term resilience.
Key Facts & Background
- GIIAS 2025 auto show triggered a surge of price-cutting among manufacturers, notably in electric vehicle (EV) offerings from China.
- Cases of steep EV markdowns, such as a Rp 180 million drop in just seven months, have frustrated early buyers and sparked debate over pricing ethics.
- Gaikindo, Indonesia’s automotive industry association, emphasized it does not regulate pricing, citing consumer protection laws that prohibit coordinated price control.
- Industry concern centers on the risk of creating a “race to the bottom” dynamic—short-term gains at the expense of sector sustainability.
- Wholesale vehicle sales dropped 8.6% YoY in H1 2025 (from 410,020 to 374,740 units), while retail sales fell 9.7% YoY.
- The middle class, key to domestic car demand, faces income growth of only 3.5% per year—lagging behind a 7.5% rise in vehicle prices.
- More than 1.5 million workers are employed across the auto supply chain, from parts manufacturers to dealerships.
Strategic Implications
Indonesia’s automotive industry is at a crossroads. While aggressive discounts may stimulate short-term sales and expand EV adoption, they risk destabilizing pricing norms and undermining brand equity. Without pricing discipline or value-based competition, the market could spiral into volatility, pressuring margins and fragmenting dealer networks.
The influx of low-cost Chinese EVs represents both opportunity and disruption. On one hand, they democratize access to green mobility. On the other, they expose domestic players to cost competition they may not be structurally prepared to withstand. This calls for a rethink of Indonesia’s auto industry positioning—from price-led tactics to innovation-led strategies.
With falling sales and widening affordability gaps, the middle-class squeeze reflects broader macroeconomic challenges. If unaddressed, this could erode demand fundamentals and stall industry recovery. Policymakers and industry leaders must explore targeted fiscal incentives, credit access reforms, and consumer trust mechanisms to reinforce demand.
The automotive sector’s strategic role in employment and manufacturing makes it more than a marketplace—it is a national economic pillar. Overreliance on discounting threatens its development trajectory. A balanced approach combining healthy competition, quality innovation, and supply chain cohesion is essential to preserve its value and regional standing.