automotive

Towards The Era Of Electrification, Conventional Car Manufacturers At A Crossroads

The national automotive industry is experiencing a major shift as the electrification trend strengthens, which is starting to shift the dominance of conventional engine cars (Internal Combustion Engine/ICE). The pressure is reflected in the decline in sales figures, as processed from data from the Association of Indonesian Automotive Industries (Gaikindo). Where, the total distribution of vehicles from factories to dealers (wholesales) in May 2025 only reached 60,613 units, down 15.1 percent compared to the previous year. A similar condition occurred in retail sales which fell from 72,246 units to 61,339 units. 

Cumulatively, throughout January-May 2025, total wholesales were recorded at 316,981 units or down 5.5 percent compared to the previous year. Retail sales even fell 9.2 percent to 328,852 units. 

On the other hand, electric vehicles are showing a positive trend. In the first five months of 2025, total EV distribution reached 53,650 units. Interestingly, for the first time, pure electric cars (battery electric vehicles/BEVs) managed to outperform hybrids with sales of 30,327 units and 22,819 units respectively. In comparison, in 2024 BEVs sold 43,188 units, while HEVs reached 59,903 units. Now, the national electric vehicle market share has reached 11 percent, a significant increase from 5-8 percent in the previous year. 

To Kompas.com, ITB automotive observer Yannes Martinus Pasaribu called this change a strong signal of a shift in consumer tastes and expectations. "The Indonesian automotive market is experiencing a significant shift. The middle class as the largest segment of the car market still has depressed purchasing power while the millennial and Z generations who are starting to become the main market are much more critical in assessing a vehicle," he said when contacted recently. The phenomenon of a number of dealer partners switching to Chinese brands, according to him, reflects changes in the dynamics of competition in the affordable and electrified vehicle segments. "This can be read as an indication of a shift in the market paradigm and a decline in the relevance of traditional brands, especially if they do not innovate immediately," he said. Yannes continued, conventional automotive manufacturers, especially those from Japan and Korea, are now at a crossroads. 

On the one hand, they must respond quickly to the aggressive expansion of Chinese brands but on the other hand, they are also limited by domestic macroeconomic conditions. "Japanese and Korean manufacturers in the Indonesian market are currently at a strategic crossroads. On the one hand, they face intensified competition due to the expansion of Chinese brands that offer competitive prices, measurable quality, and attractive electrification portfolios," explained Yannes. 

Tag: Conventional Car Era Of Electrification Gaikindo