The automotive components industry sector in Indonesia is currently in a phase of significant pressure. Secretary General of the Indonesian Automotive Parts and Components Industries Association (GIAMM), Rachmad Basuki, stated that global geopolitical turmoil and the rise in world crude oil prices are the main triggers for the increase in industrial raw material prices, such as plastics, oils, and lubricants.
This situation is worsened by the fluctuation of the Rupiah exchange rate which tends to weaken, thereby drastically driving up the import costs of raw material components. Although production costs have swelled, industry players cannot immediately raise product selling prices in the domestic market due to concerns over weak consumer purchasing power, which risks dampening sales figures.
As a result of businesses' inability to pass on the rising production costs to consumer prices, the profit margins of automotive companies are now deeply eroded. In addition to cost efficiency issues, the national automotive industry is also faced with the threat of factory relocation to other countries in response to the uncertainty of the global business climate.
This situation demands strategic steps to ensure the national automotive manufacturing ecosystem remains competitive amidst uncertain international economic challenges. Mitigation measures are needed to maintain production stability and the sustainability of investment in this strategic sector.
