Jakarta. Indonesia can no longer afford to be complacent about its position as Southeast Asia’s largest automotive market, Industry Minister Agus Gumiwang Kartasasmita said on Thursday, warning that aggressive growth in neighboring Malaysia is threatening Indonesia’s long-held lead.

Speaking at the opening of the Indonesia International Motor Show (IIMS) 2026 in Jakarta, Agus said recent regional sales trends should serve as a wake-up call for policymakers and industry players alike.

“Automotive sales in Malaysia may already be close to Indonesia’s, or possibly even surpassing them. This is a serious alert for us,” Agus told industry executives, manufacturers, and investors at the event.

Malaysia has overtaken Indonesia in car sales after domestic wholesales in Southeast Asia’s largest economy fell sharply last year. In 2025, Indonesia’s car wholesales dropped 7.2% to about 803,000 units, from 856,000 units a year earlier, reflecting weaker consumer purchasing power and a slower-than-expected economic recovery.

By contrast, the Malaysian Automotive Association said on Jan. 21 that total vehicle sales in Malaysia reached 820,752 units in 2025, up a marginal 0.5% from the previous year.

Agus said household demand is still recovering only gradually, prompting the government to call on automakers, distributors and financial institutions to devise mitigation measures to prevent Indonesia from losing its top spot in ASEAN.

“I want all stakeholders to work together to find the right steps so Indonesia can remain the country with the highest automotive sales in ASEAN,” he said.

Despite the warning, the minister said Indonesia still has structural advantages. Car ownership levels remain relatively low compared with regional peers, leaving room for long-term growth if purchasing power improves.

“There is still significant space to strengthen consumer demand, which will ultimately support automotive spending,” Agus added.

For 2026, the government has set a moderate sales target of 850,000 units, implying growth of about 5.4% from last year. While an improvement, Agus acknowledged the figure remains well below pre-pandemic levels, when annual car sales consistently exceeded 1 million units.

“The 850,000-unit projection is not yet strong enough to return us to the one-million-unit level. We must find the best way to help this subsector rebound,” he said.

Data presented by the ministry showed the depth of last year’s slowdown. Retail sales declined to about 833,000 units in 2025 from 889,000 in 2024, while the low-cost green car (LCGC) segment — long a volume backbone — saw wholesales plunge 30.6% to just 122,000 units.

Still, two pillars helped keep the industry afloat: exports and electric vehicles. Shipments of completely built-up (CBU) vehicles rose 9.7% to 518,000 units in 2025, while battery electric vehicle sales surged to 103,000 units from 43,000 a year earlier.

“This recovery has been supported by export performance and the rapid development of electrified vehicles,” Agus said, cautioning that global challenges such as semiconductor supply constraints and tighter financing conditions continue to weigh on a full rebound.

Dyandra Promosindo President Director Daswar Marpaung, whose company organizes IIMS, said the exhibition is expected to help stimulate demand and strengthen collaboration across the automotive value chain.

With factory utilization currently at about 61.8%, the government is targeting an increase to at least 70% to better leverage Indonesia’s installed production capacity of 2.6 million vehicles annually.

“IIMS is not just an exhibition,” Daswar said. “It is a collaborative platform that brings together manufacturers and industry players to strengthen the ecosystem and drive innovation.”

IIMS 2026 runs from Feb. 5 to Feb. 15 at JIExpo Kemayoran, featuring dozens of global and regional brands as Indonesia seeks to defend its automotive leadership amid intensifying competition in Southeast Asia.