Unraveling the Dramatic Chapters of Hyundai's Journey in Indonesia's Auto Market
The Genesis of Struggle: Hyundai's Early Footprint in Indonesia
Prior to the global pandemic, Hyundai's market share in Indonesia was minimal, with annual sales hovering around just 1,000 units between 2016 and 2019. During this period, the Staria MPV stood as Hyundai's sole vehicle produced locally through a manufacturing agreement with PT Handal. Despite its constrained presence, Hyundai harbored significant ambitions to broaden its reach within Indonesia, a nation boasting Southeast Asia's largest populace and ranking fourth globally. To realize this objective, the company disclosed intentions to establish its own manufacturing facility in the country.
The Ascendant Arc: Hyundai's Soaring Success and Market Expansion
With the inauguration of Hyundai's new manufacturing facility in 2022, commencing with the production of the Creta SUV in the first quarter and the Stargazer MPV in the third quarter, the automaker experienced a remarkable surge in sales. Unit sales skyrocketed from 3,160 in 2021 to 32,000 in 2022, further increasing to 35,500 in 2023. Additionally, government incentives for Battery Electric Vehicles (BEVs) bolstered Hyundai's production of the IONIQ 5 BEV, empowering the company to aggressively contend with dominant Japanese brands. Concurrently, Hyundai dissolved its partnership with PT Handal, signifying its readiness for independent operation. The initial production capacity of Hyundai's new plant was 150,000 units annually, with half designated for export, suggesting a domestic sales target of approximately 75,000 units—a goal already halfway achieved by the close of 2023, marking a significant milestone in Hyundai’s growth trajectory.
The Unforeseen Reversal: A Sudden Market Downturn and New Entrants
Mirroring the unpredictable turns in a K-Drama, Hyundai Indonesia's sales recently experienced a sharp decline. In 2024, sales plummeted by 37% year-over-year to 22,400 units, followed by an additional 10% decrease from January to July 2025, reaching 12,400 units. This abrupt shift is largely attributed to the proliferation of Chinese automotive brands entering the Indonesian market, offering competitively priced models and BEVs amidst a broader softening of demand. The number of Chinese automakers in Indonesia expanded dramatically from just three in 2022 to eleven in 2024, with projections indicating a rise to approximately twenty by the end of 2025.
The Evolving Landscape: Strategic Responses to Intensified Competition
Adding another layer to this complex narrative, PT Handal, Hyundai's former partner, transitioned into a contract manufacturer for numerous Chinese brands, including Chery, Omoda, Neta, Jaecoo, and Jetour, alongside other emerging OEMs such as BAIC, Geely, Lepas, and Xpeng. This shift in manufacturing alliances, benefiting from governmental incentives to reduce production costs and accelerate factory investments, signals a new competitive phase. These developments conclude the initial chapter of Hyundai Indonesia’s journey, leaving its future uncertain as the once-dominant protagonist now confronts formidable competition and shifting allegiances.
Charted Path Forward: Hybrid Focus and Collaborative Opportunities
As Hyundai navigates this challenging environment, striving to revitalize its sales and reinforce its market position in Indonesia, an anticipated strategic pivot involves bolstering its Hybrid Electric Vehicle (HEV) portfolio. While the company initially emphasized Internal Combustion Engines (ICEs) and BEVs, the BEV sector is now characterized by intense competition and price wars initiated by Chinese manufacturers. Given the comparatively smaller market size for BEVs relative to ICEs and HEVs, prioritizing hybrids could unlock new growth avenues. A potential collaboration with Kia also presents a viable solution. Kia, which similarly faced a sales downturn in Indonesia—from 2,900 units in 2021 to 1,000 in 2024, and a mere 70 units from January to July 2025—could benefit significantly. Such a partnership would enable both brands to pool resources, optimize plant utilization, and reduce production expenses, potentially ushering in a new era of resurgence for Hyundai in Indonesia.