Fitch sees weak car sales weighing on Indonesia insurers, NBFIs

Fitch expects modest premium growth through 2026.

Fitch Ratings expects weak car sales in Indonesia to weigh on the earnings of non-bank financial institutions (NBFIs) and non-life insurers in 2026, with NBFIs likely to feel the greater impact due to their reliance on auto financing.

Four-wheel vehicle (4W) sales are forecast to stay below 900,000 units next year, after averaging 62,000 units per month in January to August 2025, down from 72,000 in 2024.

Fitch said higher vehicle prices, the end of electric vehicle incentives, and limited appetite for new lending will keep demand subdued.

Despite 100bp in policy rate cuts this year to 4.75%, the firm does not expect a sharp recovery in auto financing.

NBFI receivables slipped to $43.1b (Rp718t) in June 2025 from $43.8b (Rp730t) in March, whilst used car financing growth slowed to 6% year-on-year in the first half of 2025, from 14% in 2024.

Non-life insurers, with motor accounting for just 16% to 20% of total premiums, are less exposed. Fitch expects modest premium growth through 2026, following a 9% rise in 2024.

But insurers more dependent on motor lines, such as PT Asuransi Mitra Pelindung Mustika, could face earnings pressure as competition intensifies in property and credit insurance segments.

($1.00 = Rp16,570.50)