Indonesia’s automotive sector is achieving unprecedented levels of domestic content in vehicle production, according to ProSpace Indonesia’s Automotive Industry Report. Local components now account for 86% of production value in domestically assembled vehicles, up from 74% in 2023.
The localization push has created an estimated 45,000 new jobs in the component manufacturing ecosystem while reducing import dependency. Major international automakers have established or expanded component manufacturing facilities, with Japanese and Korean companies leading investments totaling $1.9 billion over the past 18 months.
“We’re witnessing the maturation of Indonesia’s automotive manufacturing capabilities,” explains Hendri Wijaya, Automotive Industry Specialist at ProSpace. “The component ecosystem now offers quality and cost advantages that make Indonesia increasingly attractive as a regional production hub.”
Electronic components show the strongest localization growth, with local production of wire harnesses, sensors, and control units expanding by 63% since 2023. Meanwhile, battery production capacity has tripled to support growing electric vehicle assembly.
Vehicle production reached 1.45 million units in 2024, with domestic sales accounting for 65% and exports reaching 490,000 units, primarily to Southeast Asian and Australian markets. The government’s tax incentives for locally produced vehicles have effectively stimulated demand while supporting the manufacturing ecosystem.
Challenges include adapting to rapid technological changes and developing specialized engineering talent needed for advanced component production.
For automotive market analysis: Phone: +62 21 5799 8989 Email: info@prospaceindonesia.com Follow @prospace.indonesia on Instagram for updates