GfK: Japanese Tyre Makers Control 70% of Major Indonesian Replacement Markets

A GfK Indonesia retail audit, covering the area of Jakarta and Surabaya, of passenger car tyres in July 2009 reported close to 110,000 units of car tyres traded in retail level, with sales worth more than $6.75 million. According to the retail census, there are currently a total of 435 shops retailing car tyres which consist of: 300 Car Tyre Specialists, 110 Car Garages and 25 Fast Fitters. Car Tyre Specialists made up the bulk of the passenger car tyre retail sales with 85 per cent of units sold through this core channel. These results clearly show consumers’ preference to “specialised” shops when replacing tyres.

Japanese tyre manufacturers currently lead the market with close to 70 per cent cumulative share. Nonetheless, local brand manufacturers’ total brand share exceeds 20 per cent, after the Japanese brands. In Malaysia, we see combined sales of European and American brands taking up a 40 per cent share. However, in Indonesia these same brands hold less than 10 per cent of retail sales.

Mr. Guntur Sanjoyo, general manager of GfK Indonesia explained, “Because of the strong sales of Japanese cars in the Indonesia market, Japanese tyre makers benefit from consumers’ loyalty to their OEM tyres when making replacements. Other tyre makers will have to do something different to break this buying pattern. We believe that unique brand positioning and a service oriented approach play important roles to provide higher value for money if other brands want to break through or do well.”

Despite the dominating performance of Japanese tyre makers in Indonesia, local brands still manage to place five models among the top 20 best selling models in July 2009. The combined unit sales of these 20 models take up 70 per cent of the market.

Positively correlating with the popularity of MPV and city cars in the nation, Indonesia is predominantly characterized by small to medium sized tyres, shown by tyres with rim diameters of 15″ and below taking up over three quarters of the market.

It is crucial that car tyre manufacturers understand the retail environment as it allows them to give strong support to the retail front. Feedback gathered by GfK from retailers showed that aside from profit margin, quick reaction to complaints is one of the key factors in maintaining dealers’ satisfaction. This is a parity point that all brands will have to achieve to compete well in the retail market.