Low Cost Green Car

Low Cost Green Car (LCGC) (Kendaraan Bermotor Roda Empat Hemat Energi dan Harga Terjangkau (KBH2)) is an Indonesian automobile regulation which exempts low-cost and energy-efficient cars from luxury sales tax to ensure affordability, provided that 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 category and the Thai Eco Car program which also reduce taxes for small and efficient cars.

Specifications
The Ministry of Industry regulates LCGC to conform with the following initial specifications:
 * Petrol engine, displacement capacity of 980–1,200 cc (0.98-1.2 L) with fuel consumption not lower than 20 km/L;
 * Research Octane Number (RON) 92 fuel for petrol engines;
 * Diesel engine, displacement capacity up to 1,500 cc (1.5 L) with fuel consumption not lower than 20 km/L;
 * Cetane number (CN) 51 fuel for diesel engines;
 * Turning radius below 4.6 m (4,600 mm);
 * Selling price below Rp 95,000,000 (2013) according to the location of the headquarters of the sole agent, with adjustment for automatic transmission being 15%, for safety features 10%, and could be adjusted to inflation;
 * 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 the 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 with a maximum displacement of 1,200 cc for petrol and 1,500 cc for diesel and a minimal fuel consumption of 20 km/L.
 * 50 percent luxury tax for green vehicles (hybrid, LPG, electric and others) with a minimal fuel consumption of 28 km/L.
 * 75 percent luxury tax for green vehicles (hybrid, LPG, electric and others) with a fuel consumption between 20 and 28 km/L.

Investment
Toyota, Daihatsu, Suzuki and Honda are set to produce a combined 500,000 LCGCs a year with a 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 the Karawang Assembly Plant to anticipate LCGC, although the government's LCGC rule had not yet been released. The plant would assemble 4,000 units of the Toyota Avanza and/or Daihatsu Xenia per month in the first run and would produce 10,000 units 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 Toyota Avanza and Honda Mobilio.

Production and export
In 2013, Indonesia produced 52,956 LCGC/LEC with no export, and predicted that the 2014 LCGC/LEC production would be150,000 units. Initial exports of the Daihatsu Ayla (as the Toyota Wigo) had been done in February 2014 to the Philippines. In 2013, Indonesia had exported non LCGC/LEC 170,907 Completely Built-Up (CBU) cars, and 105,380 Completely Knocked Down (CKD) cars.