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Stronger Car Sales in Indonesia Not a Sign of Middle-Class Recovery

Indah Ayu Pujiastuti
May 12, 2026 | 12:07 pm
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Visitors look at vehicles on display at the GAIKINDO Jakarta Auto Week 2025 at the Indonesia Convention Exhibition (ICE) in Tangerang, Banten, Friday, Nov. 21, 2025. The year-end automotive exhibition features 80 participants, including 33 passenger car brands, 10 motorcycle brands, two coachbuilders, and various supporting industries, and runs through Nov. 30, 2025. (Antara Foto/Muhammad Iqbal)
Visitors look at vehicles on display at the GAIKINDO Jakarta Auto Week 2025 at the Indonesia Convention Exhibition (ICE) in Tangerang, Banten, Friday, Nov. 21, 2025. The year-end automotive exhibition features 80 participants, including 33 passenger car brands, 10 motorcycle brands, two coachbuilders, and various supporting industries, and runs through Nov. 30, 2025. (Antara Foto/Muhammad Iqbal)

Jakarta. Indonesia’s automobile sales rose 12% in the first four months of 2026, supported by seasonal demand and new model launches, but this does not necessarily indicate a broad recovery in middle-class consumption, according to Josua Pardede, chief economist at Permata Bank.

Data from the Indonesian Automotive Industry Association (Gaikindo), showed national vehicle sales reached 289,787 units between January and April, up 12% from the same period a year earlier.

Wholesale sales — shipments from manufacturers to dealers — surged 32% month-on-month in April to 80,776 units. Retail sales, which reflect direct purchases by consumers, increased 13.7% to 75,730 units.

Josua Pardede, chief economist at Permata Bank, said the April jump was not yet enough to conclude that middle-class consumption had broadly recovered.

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“I see this more as a selective recovery,” Josua told Investor Daily on Monday. “Upper-middle-income consumers remain relatively resilient, while lower-middle-income groups are still cautious because food prices, transportation costs, loan installments and pressure from the weakening rupiah continue to strain household budgets.”

According to Josua, lower-income consumers remain hesitant to purchase durable goods as rising living costs continue to erode purchasing power.

He added that Indonesia’s automotive industry remained under pressure throughout 2025. National car sales last year fell around 7% to 803,000 units. Passenger vehicle sales dropped 8.9%, while commercial vehicle sales weakened about 1%.

The figures suggest the domestic automotive market has not fully recovered despite signs of improvement in recent months, he said.

Josua said April’s strong performance should instead be viewed as a combination of post-Eid technical recovery, a low comparison base, new model launches, dealer promotions, improved vehicle availability and the resilience of some affluent consumers.

He added that sales performance between May and July would be a key indicator of whether the automotive market is entering a healthier recovery phase or merely experiencing a temporary seasonal rebound.

“If retail sales can remain above 70,000 units per month, then we can say automotive demand is beginning to recover more sustainably,” Josua said. “If sales fall back to around 60,000 units, then April’s surge was likely temporary.”

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