Low Cost Green Car (LCGC) ( id, Kendaraan Bermotor Roda Empat Hemat Energi dan Harga Terjangkau (KBH2), , Energy Efficient and Affordable Automobiles) is an Indonesian automobile regulation which exempts low-cost and energy-efficient cars from luxury sales tax to ensure the affordability, provided they are assembled locally with a minimum amount of local components. The introduction of LCGC in Indonesia was meant to encourage the motorcycle owners/public transportation users to be able to afford their first cars, to reduce fuel subsidy and to compete with Thailand-imported cars, thus creating more jobs locally. In some aspects, the regulation is similar to the Japanese

kei car Kei car (or , kanji: , "light automobile", ), known variously outside Japan as Japanese city car or Japanese microcar, is the Japanese vehicle category for the smallest highway-legal passenger cars with restricted dimensions and engine capacit ...

category and Thai Eco Car program which also reduce taxes for small and efficient cars.

Specifications

Ministry of Industry regulates LCGC to conform with the following initial specifications: *

Petrol engine A petrol engine (gasoline engine in American English) is an internal combustion engine designed to run on petrol (gasoline). Petrol engines can often be adapted to also run on fuels such as liquefied petroleum gas and ethanol blends (such as ''E ...

, range of capacity 980–1,200 cc (0.98-1.2 L) with fuel consumption not lower than , *

Research Octane Number An octane rating, or octane number, is a standard measure of a fuel's ability to withstand compression in an internal combustion engine without detonating. The higher the octane number, the more compression the fuel can withstand before detonating. ...

(RON) 92 fuel for petrol engine, *

Diesel engine The diesel engine, named after Rudolf Diesel, is an internal combustion engine in which ignition of the fuel is caused by the elevated temperature of the air in the cylinder due to mechanical compression; thus, the diesel engine is a so-call ...

, range of capacity up to 1,500 cc (1.5 L) with fuel consumption not lower than , *

Cetane number Cetane number (cetane rating) is an indicator of the combustion speed of diesel fuel and compression needed for ignition. It plays a similar role for diesel as octane rating does for gasoline. The CN is an important factor in determining the quali ...

(CN) 51 fuel for diesel engine, * Turning radius below 4.6 m (4,600 mm), * Selling price below than Rp 95,000,000 (2013) according to the location of the headquarter of the sole agent, with adjustment for

automatic transmission An automatic transmission (sometimes abbreviated to auto or AT) is a multi-speed transmission used in internal combustion engine-based motor vehicles that does not require any input from the driver to change forward gears under normal driving c ...

is 15%, for safety features 10%, and could be adjusted to

inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...

, * Addition of an Indonesian brand name and logo, * Manufacturing facility investment plan.

Regulation

In May 2013, the Indonesian government released the Government Regulation (''Peraturan Pemerintah'') Number 41 Year 2013 about Luxury Tax of Vehicles concerning LCGC and Low Emission Carbon (LEC) regulations. The main points of the regulation are: * 0 percent luxury tax for cars with

ICE Ice is water frozen into a solid state, typically forming at or below temperatures of 0 degrees Celsius or Depending on the presence of impurities such as particles of soil or bubbles of air, it can appear transparent or a more or less opaq ...

with a maximum displacement of 1,200 cc for petrol and 1,500 cc for diesel and a minimal fuel consumption of . * 50 percent luxury tax for green vehicles (hybrid, LPG, electric and others) with a minimal fuel consumption of . * 75 percent luxury tax for green vehicles (hybrid, LPG, electric and others) with a fuel consumption between .

Investment

Toyota, Daihatsu, Suzuki and Honda are set to produce a combined 500,000 LCGCs a year with predicted total investment of $1.8 billion in Indonesia by the end of 2012, after the government has agreed to exempt the LCGC from the luxury tax to boost domestic sales. On April 22, 2013, PT Astra Daihatsu Motor officially opened Karawang Assembly Plant to anticipate LCGC, although government's LCGC rule was not yet released. The plant assembles 4,000 units

Toyota Avanza The Toyota Avanza and Daihatsu Xenia are cars developed by Daihatsu and marketed by both Toyota and Daihatsu. It is a multi-purpose vehicle (MPV) and mainly sold with three-row seating. The Avanza and Xenia were developed as an entry-level MPV ...

and/or

Daihatsu Xenia The Toyota Avanza and Daihatsu Xenia are cars developed by Daihatsu and marketed by both Toyota and Daihatsu. It is a multi-purpose vehicle (MPV) and mainly sold with three-row seating. The Avanza and Xenia were developed as an entry-level MPV ...

per month in the first run and would produce 10,000 unit of cars per month, including the LCGC Toyota Agya and Daihatsu Ayla when the rule had been released.

Models and sales

In the first three months of 2014, 43,969 LCGC cars were sold. In the first six months of 2014, 85,643 LCGC cars were sold. In first seven months of 2014, the LCGC Toyota Agya sold 41,520 units to become the third highest selling car in Indonesia after the

and

Honda Mobilio The is a seven-seat mini MPV produced by the Japanese automaker Honda. The first-generation Mobilio that was produced from 2001 to 2008 and sold exclusively in Japan, was the second model in Honda's "Small Max" series and also took Honda's Glo ...

Production and export

In 2013, Indonesia produced 52,956 LCGC/LEC with no export, and predicted 2014 LCGC/LEC production is 150,000 units. Initial export of Daihatsu Ayla (as Toyota Wigo) has been done in February 2014 to

Philippines The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no), * bik, Republika kan Filipinas * ceb, Republika sa Pilipinas * cbk, República de Filipinas * hil, Republ ...

. In 2013, Indonesia has exported non LCGC/LEC 170,907 Completely Built-Up (CBU) cars, and 105,380 Completely Knocked Down (CKD) cars.

References