Plastic crunch threatens Indonesia’s car production, fuels price pressures

JAKARTA – Indonesia’s automotive industry is facing mounting supply chain risks due to global plastic shortage, driven by rising petrochemical feedstock prices and logistics disruptions.

Mr Yusak Billy, the sales, marketing and after sales operations director at Honda Prospect Motor, said the company was monitoring the situation closely and adjusting its operations to maintain production stability.

“In recent months, there have been dynamics in logistics processes and costs across several areas within the global automotive supply chain,” Mr Billy said, as quoted by Kompas.

Plastic materials are widely used in vehicle manufacturing, from interior components such as dashboards and door panels to parts in the engine compartment. Therefore, disruptions in the supply of polymer-based materials can slow assembly lines and delay production.

Mr Billy said Honda was evaluating supply planning for several models and making adjustments to ensure a balance between supply and demand, with the aim of minimising delivery delays to customers.

However, he warned that prolonged disruptions could affect distribution at the retail level.

“If these dynamics continue, there is a possibility of adjustments in vehicle distribution to our dealers,” he said.

The shortage has also raised concerns about rising production costs as higher prices for plastic resins could increase per-unit manufacturing costs. This could potentially lead to price adjustments, although manufacturers are seeking to avoid passing on additional costs to consumers.

Toyota Motor Manufacturing Indonesia’s vice-president director, Mr Bob Azam, has also warned of a potential shortage in plastic raw materials, citing geopolitical tensions in the Middle East as a factor disrupting global supply chains.

“We hope this can be resolved properly. We don’t want purchasing power to be hit because (many industries raise prices),” Mr Bob was quoted as saying by Bloomberg Technoz on April 5.

Mr Bob emphasised the importance of maintaining stable supply chains to prevent broader industrial disruptions, while also urging companies to exercise restraint in raising prices.

“Although this shortage will drive prices up, we in the industrial sector should hold back as much as possible. We should avoid raising prices in a difficult situation like this,” he said.

Astra Daihatsu Motor deputy marketing director Rokky Irvayandi said rising plastic raw material prices could potentially affect the automotive industry, although manufacturers are still working to keep the impact under control.

“If plastic prices rise, will there be an impact? There is a possibility. There may be an effect, but whether it will affect car prices is a different matter because pricing depends on many components, including pricing strategy,” Mr Rokky said at bus and truck expo GIICOMVEC 2026 in Central Jakarta on April 8, according to Detik.

“As for prices, there has been no increase in new car prices so far. At this point, we are not planning any price hikes. The situation is still under control,” he said.

Global plastic prices have risen significantly due to disruptions in the supply of key feedstocks such as naphtha, which are used to produce plastic resins.

Other than the automotive industry, the impact has already been felt in other sectors, such as the food and beverage industry, which has reported packaging cost increases of up to 60 per cent, while traditional market vendors and small businesses have begun reducing the use of plastic bags to offset higher costs. THE JAKARTA POST/ASIA NEWS NETWORK