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.