Jakarta. Indonesia expects domestic vehicle sales to exceed 850,000 units in 2026, on the back of a recovery in production and wholesale deliveries during the first half of the year, Industry Minister Agus Gumiwang Kartasasmita said on Thursday.

National vehicle production reached 615,000 units in the January-June period, up 11.3% from a year earlier, while wholesale sales—shipments from manufacturers to dealers—rose 15.9% to 436,000 units, Agus said while opening the 2026 Gaikindo Indonesia International Auto Show (GIIAS) in Tangerang.

"Based on these figures, we are optimistic that automotive sales this year will, God willing, exceed 850,000 units," he said.

The projection would mark a recovery from the industry's recent downturn but remain below pre-pandemic highs. Indonesia's car market peaked at nearly 1.23 million units in 2013 and returned above the one-million mark in 2023, when wholesale sales reached 1.008 million vehicles.

Demand has since weakened as softer household purchasing power weighed on consumer spending. Wholesale sales fell to 865,723 units in 2024 and declined further to 803,687 units in 2025.

Despite the improvement, Agus argued that 850,000 units should not be viewed as the industry's ceiling, saying Indonesia's automotive market remains far from saturated.

Indonesia has just 19 passenger cars for every 1,000 people, compared with 275 in Thailand and 490 in Malaysia, according to government data. With a population approaching 290 million, each one-point increase in vehicle ownership could generate demand for roughly 280,000 additional cars.

"The target of 850,000 units should not be regarded as the upper limit," Agus said. "It is merely a starting point because Indonesia's automotive market is still far from saturation. In many ways, our automotive market is only just beginning."

The minister said the government wants future demand to be met increasingly by vehicles manufactured domestically rather than imports, reinforcing Indonesia's ambitions to become a regional automotive production hub.

"This growth opportunity should not be filled by imported products, but by vehicles produced in Indonesia across every level of the industrial value chain," he said.

Agus also pointed to improving trade performance as evidence of the sector's transformation. Exports of completely built-up (CBU) vehicles rose 7.7% in the first half of the year, while exports of completely knocked down (CKD) vehicles surged 38%. Component exports climbed 46%, even as vehicle imports declined.

The shift, he said, suggests Indonesia is evolving from one of Southeast Asia's largest consumer markets into a manufacturing and export base for the automotive industry.

"Indonesia is no longer simply exporting vehicles," Agus said. "We are beginning to export the capability to manufacture them."