The Indonesia Tire Market was valued USD3.36 billion in 2021 and is forecast to grow at CAGR of 7.11% through 2028 on account of country's increasing domestic automobile market and greatly increased exports. Moreover, the country is also the second largest rubber producer across the globe.

Recent Developments

Indonesia is third largest two-wheeler market across the global and the country is also the second largest producer of rubber. There are many key global tire players in the Indonesia Tire Market. Moreover, many companies are investing toward increasing rubber plantation in Indonesia and recently PT Multistrada Arah Sarana Tbk has acquired shares of Michelin Indonesia for around USD 13 million, The companies in the region are also innovating like Bridgestone Indonesia and Soles4Souls Asia has partnered to make shoes from the recycled tires, Bridgestone also has a plan to expand its production capacities at plants in Indonesia in the coming two years and the company is expected to invest around USD 136 million. The company will cater to the demand by increasing the plant capacity from 45 percent with an production of  27,000 tires.

The leading global tire manufacturer Hankook Tire has been awarded Silver at the Indonesian K-Brand Award 2022. Hankook Tire is also providing NR farmers of Indonesia with eco-friendly coagulants. Michelin has completely acquired Indonesian sustainable rubber plantation project, and this makes Michelin a sole owner of the Royal Lestari Utama (RLU), and this is a joint venture with Barito Pacific Group. The companies are also developing smart and green tires, by using sustainable raw material in the tire manufacturing and the emission targets is also leading companies to focus more on the sustainable products.

The rise in the adoption of the vehicles in Indonesia is leading to a growth of the automobile industry, especially the two-wheeler segment is witnessing higher demand and this is consequently leading to a rise in demand for tires in the country and the abundance of the rubber in the country is helping them to lead the export of the tire and rubber globally. The availability of the top tire manufacturers is also adding great value to the Indonesia tire market and the market is expected to witness high growth rate during the forecast period.

Japanese automakers with ICEs have historically dominated Indonesia's automobile market, but new entrants are concentrating more on electric vehicles. The ASEAN region is the focus of an increase in export production by Japanese automakers in Indonesia. As a result, favorable macroeconomic conditions and lucrative investment prospects draw influential players and spur market expansion.

Increasing Vehicle Ownerships

The growth of the automobile industry in Indonesia has been remarkable and all the vehicle segments are seeing rise in demand. Commercial vehicles utilization has increased because of the ongoing infrastructure projects in the country, and all this has led to the rise in demand of the tires in the country. Big automobile companies such as Toyota has witnessed 55.3% year-on-year growth. The tire replacement segment has also witnessed rise in demand because of the increasing construction and infrastructure projects in the country. The rise in the automobile sales in the country is also favoring the growth dynamics and during the forecast years the market is expected to witness the market is expected to generate new growth opportunities.

Raw Material Availability

The adequate availability of the rubber in the country is one of the reasons that is making Indonesia a global tire hub. Many key global tire manufacturers are investing in the rubber plantation in the country. Companies are also focusing on obtaining sustainable rubber and other similar products that can be used as a raw material in the manufacturing of the tires. Overall, the easy availability of the rubber in the country is a crucial factor that is influencing growth dynamics of the Indonesia Tire Market.

Country Specific Regulatory Barriers

The export tire market of Indonesia is affected by the regulatory barriers of different countries. For instance, labeling standards and many other related barriers, become a challenge for the tire manufacturers and such regulatory standards are acting as barriers. Tire manufacturers are required to meet the regulatory frameworks as most countries have specific regulations and quality standards, and the increasing demand for such country-specific regulations is coming out as a challenge for the key tire manufacturers in the country. Regulations in EU wet grip classification, tire performance labelling indicate fuel consumption and noise emission standards are mandatory. Similarly, in the US, tires are required to meet the "Uniform Tire Quality Grading Standards" set by the  U.S. Dept. of Transportation, so there are number of regulations and as Indonesia is one of the biggest tire market across the globe, the export figures of Indonesia tire market in the coming years can generate significant revenue because of the higher demand of the tires globally but such regulations can affect the growth in the market.

The coronavirus pandemic has dealt a significant blow to Indonesia's automotive industry. To comply with social distancing norms, there were temporary closures and production cuts. Many businesses were also impacted by supply chain disruptions.