Indonesia Tire Market; By type (Radial, Bias), By Application (Passenger Cars, Buses, and Trucks, (Off-the-road) OTR mining, Two Wheelers), By Demand Category (OEM, Replacement), By Rim Size Trend Analysis, Competitive Market Share & Forecast, 2018-2028

Indonesia Tire Market; By type (Radial, Bias), By Application (Passenger Cars, Buses, and Trucks, (Off-the-road) OTR mining, Two Wheelers), By Demand Category (OEM, Replacement), By Rim Size Trend Analysis, Competitive Market Share & Forecast, 2018-2028

Indonesia Tire Market Set to Draw a Promising Growth: Slated to Grow at a CAGR of 9.9% by 2028

A rising disposable income and a growing fleet of automobiles are contributing to the growth of Indonesia's tire market. Additionally, increasing two-wheeler sales and favorable macroeconomic conditions are the two key drivers of the country’s tire market…

A recent study by the strategic consulting and market research firm BlueWeave Consulting revealed that the Indonesia tire market is anticipated to grow at a CAGR of 9.9% during the forecast period (2022-2028). The market's expected growth can be ascribed to a rising disposable income and a growing fleet of automobiles. Increasing exports of tires and the growing number of motorcycles purchased by Indonesia's middle class have led to a proliferation of the country's tire industry. Nevertheless, concerns such as fluctuating prices of raw materials required for tire manufacturing and environmental concerns related to tire disposal may negatively affect the Indonesia tire market during the forecast period.

Increasing motorcycle sales contributing to the growth of the Indonesia tire market

As a result of the prevailing road conditions and traffic congestion on Indonesia's roads, motorcycles are the most common mode of transportation in the country, used by both rich and poor. For a leading player like Honda, Indonesia has become the world's biggest two-wheeler market with sales surpassing India with 4.85 million units sold in 2020 by PT Astra Honda Motor. With the increase in production and sales of two-wheelers, demand for tires is sure to rise across the country.

Good Macroeconomic Conditions Contribute to the market’s growth

Indonesia is the world’s fourth most populous nation and the largest economy in Southeast Asia. Following the disruptions caused by the pandemic, the national GDP of Indonesia is forecast to grow by more than 5% in 2022 and 2023 according to OCED (The Organisation for Economic Co-operation and Development). Furthermore, according to the German-Indonesian Chamber of Commerce and Industry, the automotive industry accounts for 8.3% of the manufacturing industry and 1.6% of the Indonesian economy. With the growth of automobiles, especially two-wheelers, there will be increased demand for tires in Indonesia. Also, due to the government's introduction of import quota regulations, an increase in exports has been observed. According to the UN Comrade, as of 2017, the Indonesian archipelago ranked eighth in the world in the export of passenger car tires, just behind France. Moreover, due to favorable FDI and the availability of raw materials, such as rubber, manufacturers are planning to expand their business in Indonesia, which contributes to the growth of the Indonesia tire market.

The two-wheeler segment is expected to witness tremendous growth in upcoming years.

Based on applications, the Indonesia tire market is segmented into passenger cars, buses, trucks, OTR (Off-the-road) mining, and two-wheelers. Out of these, the two-wheelers segment dominates the market in terms of revenue and is expected to grow at a healthy CAGR during the forecast period. Indonesia is the third-largest market for two-wheelers after India and China. With a growing middle-class population, the need for a cheaper and convenient mode of transportation has increased in the country, thereby driving the growth of its tire market. Moreover, the increasing number of female riders and congestion on Indonesian roads have all contributed to the growth of the two-wheelers segment in the country, which explains the growth of the Indonesia tire market.

The radial segment holds the largest share in the Indonesia tire market

The Indonesia tire market is segmented into radial and bias, based on tire types. The radial segment accounts for the largest share in the Indonesia tire market. Radial Tires offer numerous benefits such as lower fuel ingesting, less ground compaction and harm, and reduced machine upkeep costs. Besides this, they require less frequent replacement and give greater output, leading to the growth of this segment.

Impact of COVID-19 on Indonesia tire market

The COVID-19 pandemic has dramatically affected the Indonesian automobile industry, which hampered the country’s tire market's growth. From January to June 2020, motor vehicle manufacturers in Indonesia witnessed a drop in their production and sales. There were temporary closures and production cuts owing to shortage of workers caused by the lockdown. Supply chain disruptions also affected many companies. According to the German-Indonesian Chamber of Commerce and Industry, the production output of cars and commercial vehicles was only 2500 units in May 2020. All these factors have hampered the growth of the Indonesia tire market. The Indonesian economy, however, is likely to recover in the long run, and with rising income levels and new investments, the market will be back on track. Nevertheless, the emergence of the Omicron variant of the coronavirus poses a threat to the market.

Indonesia Tire Market - Competitive Landscape

The key players dominating the Indonesia tire market are Gajah Tunggal Tbk, Bridgestone Tire Indonesia, Multistrada Arah Sarana, Tbk. (Michelin), Inoue Rubber Co., Ltd., Suryaraya RubberIndo Industries (FDR), Timsun Rubber Tire (Weihai) Co., Ltd., Goodyear Indonesia Tbk, Sumi Rubber Indonesia, Hankook Tire Indonesia, Tiga Berlian Mandiri (Tiberman), and other prominent players. The key marketing strategies adopted by the players are new launches, collaborations, and partnerships. These strategies assist the market participants to expand their customer reach and gain a competitive edge. For instance, in August 2021, TVS Srichakra, a leading manufacturer of two and three-wheeler and off-highway tires, entered the Indonesian market, launching ‘Eurogrip Bee City’ – a range of two-wheeler tires completely customized to suit the needs of Indonesian riders.