Indonesian Auto Loan Market Faces Downturn as Sales Decline

Slowing Demand Affects Auto Loan Disbursement

The Indonesian automotive industry is experiencing a significant slowdown, directly impacting the banking sector's auto loan (Kredit Kendaraan Bermotor or KKB) disbursement. According to data from the Gabungan Industri Kendaraan Bermotor Indonesia (Gaikindo), retail car sales in November 2025 reached 79,310 units, representing a 3.7% year-on-year growth. However, the cumulative sales figure from the beginning of the year to November dropped by 8.4% year-on-year to 739,977 units, indicating a broader market contraction.

Motorcycle Sales Show Marginal Growth

The motorcycle segment, as reported by the Asosiasi Industri Sepeda Motor Indonesia (AISI), showed slightly better performance with November sales growing 2.1% year-on-year to 523,591 units. However, the cumulative sales for the year through November only managed to achieve a marginal growth of 0.35% year-on-year, totaling 5.95 million units. This sluggish growth in both car and motorcycle sales has led to reduced demand for auto loans, forcing banks to reassess their lending strategies.

Banking Sector Response

In response to the declining demand for auto loans, banks are now adjusting their business strategies. The slowdown in auto sales and subsequent reduction in KKB demand is prompting lenders to explore alternative growth avenues and potentially revise their credit policies. This shift is crucial as the automotive sector is a significant contributor to overall loan disbursement in Indonesia.

Market Implications

The current downturn in the automotive market reflects broader economic conditions and consumer sentiment. The banking sector's response will be critical in determining how the market evolves in the coming months. As banks adapt their strategies, there may be implications for both consumers and the overall economic outlook.