Jakarta. Indonesia’s hybrid car sales jumped 45% in the first half of 2026, prompting the government to question the need for further incentives as the technology gains stronger market acceptance and domestic production.

Chief of Economic Affairs Minister Airlangga Hartarto said the growth showed that hybrid vehicles had developed sufficient consumer appeal without additional government support. Hybrids offer fuel efficiency while retaining an internal combustion engine (ICE), making them a middle ground between conventional cars and electric vehicles (EVs).

“Hybrid is a solution between EVs and ICE vehicles for consumers. It is already an excellent option,” Airlangga said at the 2026 Gaikindo Indonesia International Auto Show (GIIAS) in Tangerang on Sunday.

Airlangga said government incentives were designed to encourage domestic production, attract investment and improve consumers’ purchasing power. Those objectives had already been achieved in the hybrid industry, he said.

“The incentives have already done their full job. They were provided to support domestic production, and hybrid cars are now produced domestically and even exported,” he said.

Read More: Indonesia Car Sales Jump 12% as EV Demand Accelerates

Rather than adding incentives specifically for hybrids, the government will continue focusing on attracting global manufacturing investment through industrial zones and various fiscal facilities, including tax incentives.

“Manufacturing industries are already here, but some factories are still located overseas. We continue to attract them, which is why we have established various special economic zones for factories in Indonesia,” Airlangga said.

The government has also provided various investment incentives, including tax facilities, to encourage manufacturers to establish production bases in Indonesia.

Automakers Seek Broader Support
Automakers, however, argue that the policy discussion should go beyond whether a particular vehicle technology deserves incentives. They say continued government support is needed to protect existing investments and maintain Indonesia’s competitiveness against regional automotive hubs.

Gaikindo Vice Chairman for Market Development Jongkie D. Sugiarto said hybrid sales had been positive and could grow further if the government provided additional stimulus.

“Prices could become more affordable and reach a wider range of consumers. We do not know what the scheme would look like, so we leave it entirely to the government,” Jongkie said.

Toyota Motor Manufacturing Indonesia (TMMIN) President Director Nandi Julyanto said the government should focus on supporting the automotive industry as a whole rather than favoring a specific technology.

“We are not talking specifically about hybrids, BEVs or any particular technology. It is more about how the existing industry can continue to grow,” Nandi said.

He pointed to Thailand, Malaysia and the Philippines, which continue to provide various forms of support despite having more established automotive industries.

Thailand, for example, has nearly 70 years of automotive manufacturing history but still provides incentives to maintain the competitiveness of its industry.

“Thailand’s industry is older than ours. We have 55 years, while Thailand has almost 70 years, and they still receive incentives,” Nandi said.

The Philippines, meanwhile, uses safeguard measures to protect locally produced vehicles, including ICE vehicles, battery electric vehicles (BEVs) and other models.

Nandi said maintaining such support was important to ensure existing investments could continue expanding. Indonesia’s automotive industry currently supports around 750,000 workers, he said.

“How can the investments already made here continue to grow? They have created around 750,000 jobs, and we need to ensure that they can continue to expand,” he said.

Nandi also highlighted growing global demand for hybrid vehicles. Hybrid exports to Toyota’s roughly 100 destination markets have increased by around 40% from a year earlier, while ICE and hybrid vehicles remain the dominant technologies in those markets.

“Therefore, it is not about the model but about the industry. But if there is also support for specific products or models, that would be even better,” Nandi said.

Hybrid Drives Toyota’s Electrification Growth
Toyota’s electrified vehicle sales in Indonesia rose 65% year-on-year in the first half of 2026, with hybrid models remaining the main driver of growth.

Marketing Director of Toyota-Astra Motor (TAM) Bansar Maduma said the increase reflected stronger consumer interest in electrified vehicles.

“This 65% growth is certainly something we are very grateful to Indonesian consumers for. It shows their enthusiasm for Toyota’s electrification,” Bansar said.

Hybrid models including the Innova Zenix Hybrid EV and Yaris Cross Hybrid EV were the main contributors, particularly in the family and urban SUV segments.

Bansar said consumers were increasingly attracted to hybrids because of their fuel efficiency, driving comfort and lower operating costs. They are also considering longer-term factors such as resale value and maintenance costs, he said.

Hybrid vehicles remain particularly relevant because they can improve fuel efficiency without relying entirely on charging infrastructure, Bansar said.

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