automotive

The Price Of New Cars Is Expected To Surge Due To The Increase In The Value Added Tax (VAT) To 12 Percent

The government is set to implement a Value Added Tax (VAT) rate of 12 percent, with plans for this change to take effect on January 1, 2025. This announcement has garnered significant attention from various stakeholders, particularly among manufacturers of four-wheeled vehicles and financing companies. The anticipated increase in VAT to 12 percent is expected to have several repercussions on the sales of new cars in the country.

"Certainly, there will be a price increase, but regarding the market, that issue should be addressed by Gaikindo. However, at the very least, the VAT increase will contribute to pricing," stated Than Chian Hok, Chief Marketing and Sales Officer of ACC (Astra Credit Companies) in Jakarta recently. He acknowledged that this new government policy would also impact consumers' purchasing power.

The increase in VAT to 12 percent will directly burden consumers, as they will bear the cost. Moreover, throughout 2024, car sales in Indonesia have been relatively sluggish, making this situation particularly challenging. "There will definitely be an increase in the price of new cars if the VAT rises from 11 percent to 12 percent," emphasized Ahok.

The proposed increase of the Value Added Tax (VAT) to 12 percent warrants thorough examination. Experts have previously indicated that there are numerous factors that require attention amidst the government's plan to raise VAT under Prabowo Subianto's administration at the beginning of next year.

"Indonesia's Middle Income Class constitutes the largest consumer group for various Low-Cost automotive products, which will further restrict their already high tertiary expenditures," stated Yannes Martinus Pasaribu, an automotive analyst and academic from ITB (Bandung Institute of Technology), in a recent interview with KatadataOTO.

Yannes pointed out that the VAT burden on consumers could represent an additional financial strain, especially considering that the income levels of the middle class have yet to improve.

This situation could directly affect the sales figures of four-wheeled vehicles, as consumers are likely to exercise greater caution when making significant purchases such as cars. "Thus, it appears that Gaikindo's target of achieving one million unit sales next year is indeed quite ambitious. It must be continuously updated in line with government policy developments," he added.

Ultimately, the regulations and policies implemented by the government will have a significant impact on the overall economy. If the economic conditions of the populace improve, he asserted, sales figures are likely to follow suit.

Government policies across various sectors will undoubtedly have a substantial effect on the automotive industry and the purchasing power of consumers domestically.

Tag: Bandung Institute Of Technology Gaikindo Value Added Tax