MPV Sales To Boost Indonesian Tyre Market – Report

An analysis from Frost & Sullivan of the Indonesian replacement tyre market says that the high number of sales of multi-purpose vehicles will mean an increase in sales of tyres. “MPVs are the major types of vehicles being sold in the Indonesian market and considering their role as transportation vehicles in difficult road conditions this segment expects to drive the overall growth of the tyre aftermarket,” notes Frost & Sullivan Research Associate Brijesh Sheregar. The Frost & Sullivan report reveals that revenues in this market totalled $1.09 billion in 2005 and can reach $2.86 billion in 2012.

Sheregar says that vehicle sales have registered a significant growth in Indonesia after the economic downturn in 1998. Newer vehicles such as the Toyota MPV expect to further boost sales, thereby sustaining growth and leading to increased volumes in the tyre aftermarket. In addition, the robust growth of the used vehicles market will add to aftermarket tyre sales, as used vehicles are the most common recipients of new tyres for a variety of reasons other than wear and tear. “Used car dealers commonly replace tyres either as a means to entice buyers or as part of the sales agreement,” Sheregar adds.

The report also says that the retreading of tyres is likely to be a major restraint on tyre sales in the Indonesian aftermarket. Its impact is likely to be most pronounced in the commercial vehicles market, where retreading is undertaken at least two or three times, affecting the replacement of tyres and revenues of market participants. The introduction of radials, however, expects to reduce the scope for retreading.
“As an added challenge, an Indonesian consumer is highly price conscious and often postpones the purchase of a new set of tyres until they are absolutely necessary,” says Sheregar. “This price consciousness is also impacting the sale of premium segment tyres and automobile manufacturers are less likely to sell performance vehicles that require premium tyres in Indonesia.”

Driven primarily by the increased number of on-road automobiles and the greater acceptance of premium tyre varieties, the overall Indonesian tyre aftermarket will continue to grow in terms of revenues and unit shipments. Although market revenues expect to increase, profit margins of manufacturers are expected to remain stable or even decline slightly due to the rise in energy prices and material costs.