Just over 9 million light-duty vehicles (LDVs) were sold in Indonesia in 2019, with an average fuel consumption of 8.1 litres of gasoline equivalent per 100 kilometres (Lge/100 km). Despite having one of the lightest weighing LDV fleets in 2019, average fuel consumption in Indonesia is 13% above the global average. The relatively low average weight of new LDVs in Indonesia (1 276 kg in 2019) stems from a sales share for SUVs/pick-ups that is 21% below the global average. Nevertheless, sales shares of SUVs/pick-ups have expanded from 13% in 2005 to 23% in 2019.
Indonesia is among LDV markets reviewed with the least improvement in fuel economy, with fuel consumption decreasing by a total of only 0.5 Lge/100 km between 2005 and 2019. The average fuel consumption of city and medium car segments has been relatively stable since 2005, while the average fuel consumption of large cars has fluctuated considerably throughout this time. Notably, a 5.3% average annual increase in fuel consumption in the large car segment between 2017 and 2019 coincided with diesel shares within this segment dropping significantly.
Sales shares of diesel LDVs have fluctuated considerably in Indonesia primarily due to changing government regulations and volatile fuel prices. The sales share of diesel powertrains grew to 13% in 2019, roughly equivalent to the global average. While diesel has been reclaiming its market share from a low in 2015, sales shares of gasoline LDVs have been slowing declining, though still claim the majority of the market. Sales shares of hybrid, electric and plug-in vehicles were negligible in 2019.
In 2003, vehicle labelling was introduced in Indonesia but required labelling of CO, HC, NOx, HC NOx + and particulates, rather than fuel economy and CO2 emissions. Indonesia’s strategy for transportation in its Nationally Determined Contribution to the United Nations Framework Convention on Climate Change is limited to fuel-switching (to biofuels) and expansion of the national network of CNG filling stations. In 2013, the Low-Cost Green Car (LCGC) program was introduced which established tax incentives for smaller vehicles that meet fuel efficiency requirements.
In 2019, the LCGC program was revised and become the Low-Carbon Emission Vehicle (LCEV) program. Under LCEV, luxury tax rates for vehicles are no longer only based on just engine capacity, but also consider engine efficiency and emissions. Vehicles emitting no more than 120 CO2 g/km, with engine capacities below a specified level are eligible for LCEV tax incentives, and a fuel economy limit of 20 km/l (gasoline) and 21.8 km/l (diesel) is also in place. Tax exemptions are applied to plug-in hybrid, battery electric and fuel-cell electric vehicles that meet a minium local content requirement, with fuel consumption equal to 28 km/l, or CO2 emissions up to 100 g/km.
Other recent directives signal a push toward accelerating uptake of fuel efficient powertrains. The General Plan for National Energy issued in 2017, sets a fleet target of 2 200 electric vehicles and hybrids by 2025. The plan also included a goal to establish fuel economy standards for motorised vehicles before 2020, but this deadline was missed. The Acceleration on Battery Electric Vehicles Program for Road Transportation released in 2019, establishes fiscal and non-fiscal incentives for local manufacturers, along with aims for expanding charging infrastructure.