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New cars on the block as Chinese brands extend turf war to Indonesia
Several new EV manufacturers have entered the Indonesian market in 2025, seeking refuge from cutthroat competition on their home turf.
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Increasing EV demand: People visit the booth of Chinese automobile manufacturer BYD on May 29, 2024, during the Indonesia International Motor Show (IIMS) in Surabaya, East Java. The government has pushed to increase electric vehicle ownership to support the energy transition. (AFP/Juni Kriswanto)
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ew Chinese carmakers have expanded into Indonesia over the past three years. By offering affordable yet feature-packed electric vehicles (EVs), they have begun to chip away at the dominant role of Japanese and South Korean brands in Indonesia’s auto market.
Despite shrinking new car sales in Indonesia in recent years, Chinese automakers are drawn to the country amid intense competition in their home market following massive capacity expansion, but also thanks to tax breaks Indonesia grants on imported cars.
In its 2023 annual report, Chinese automaker SAIC Motor highlighted intensifying market competition leading to price wars on “an unprecedented scale”.
The fierce pricing battle continued through the end of last year, with EV prices slashed by an average of 10 percent in December alone to boost deliveries and meet annual sales targets, according to a report from the South China Morning Post. The shake-up saw SAIC Motor lose its position as the country’s top car seller to BYD last year.
Spare capacity is another major challenge for Chinese carmakers that, like those in Germany and other countries, rely heavily on exports to sustain their operations.
Goldman Sachs estimates that Chinese EV manufacturers have the capacity to produce around 20 million units annually, of which only some 11 million were sold in the domestic market last year.
Between 2021 and 2024, the country’s auto exports more than tripled to around 6 million units, making China the world’s largest car exporter. Over the same period, automotive shipments from China to Indonesia doubled in value to US$3.2 billion.
