Low-cost green car policy is a 'game changer' in Indonesia

Silka Yosa, consulting analyst/automotive and transportation practice, Asia Pacific said the overall industry volume had increased a year after commencement of the LCGC programme. 

Yosa said the low carbon emission (LCE) programme  with its focus on LCGC has so far proved to be successful, driving growth of the overall market by an average of 17 per cent per month.

“While the programme  covers many green technologies, it has excluded EVs. Compared to similar programmes in Thailand and Malaysia, the LCE programme  is aimed primarily at boosting local demand and increasing motorisation while promoting greener technologies,” she added. Yosa also said that luxury tax incentives in the LCE programme and specific low pricing benchmark for LCGC benefit the domestic market rather than exports. 

She added that currently five vehicle models are offered under the programme. There is a possibility that current participants might launch more models, she said. 

“The LCGC segment volume is strongly market-driven due to the affordable and fuel-efficient traits. High support from the government through regulations, and industry readiness has led this segment to grow tremendously,” she said. 

Yosa said that the alternative fuel-based segment such as NGV and biofuel are currently constrained by the government’s support in terms of regulations and fuel infrastructure. With strong support, this segment could have high growth potential.

 “High technology-based segments (advanced engines and hybrids) are primarily driven by the supply side (the automakers). However, any penetration action will require large investment and commitment, as market demand will only grow slowly while becoming familiar with the new technology,” she added.