Indonesia/Malaysia Home to Thriving Tyre Retail Markets

As the Asian region’s car parc continues to swell in the wake of economic recovery, the demand for aftermarket products and services is also said to be increasing. GfK Asia, which conducts retail audits in the automotive aftermarket in major Asian cities like Bangkok, Kuala Lumpur, Jakarta, Manila and Seoul, recently looked into the relationship between car “populations” in these cities relative to the number tyre servicing garages and compared the saturation levels in differing economies. While each tyre servicing garage in developing cities such as Kuala Lumpur, Bangkok, Jakarta and Manila serviced an average of 2250 vehicles, this figure is almost halved, at 1172:1 in a “developed” city such as Seoul. The Malaysian figure is almost four times the 674:1 average ratio GfK published in April 2009.

“Our study shows that there has been a considerable increase in the number of automotive related retailers in the region. Take Jakarta for example. GfK’s most recent universe count conducted in May 2010 registered a 23 per cent increase in the total number of car garages and tyre specialists as compared to the previous one carried out in April 2009,” commented Stanley Kee, regional commercial director of GfK Asia.

“The automotive industry is one of the region’s key economic drivers because many economic activities rely on or are linked to this industry,” added Kee. “Vice versa, improving consumer sentiments have also boosted the performance of the industry when the global economy started picking up.”

GfK findings also reported revenue increases in the passenger car tyre aftermarket across Indonesia, Malaysia, and Korea when comparing the respective countries’ latest quarter’s sales values with the same quarter in 2009. Developing economies like Malaysia and Indonesia grew at a higher rate of 8.3 and 17.9 per cent respectively, while the replacement car tire industry in South Korea, a developed market, grew at a much lesser extent at 2.5 per cent.

“As cars become more stylish, tyre trends move in similar tandem to match in sophistication, leaning towards higher speed ratings, and heavier tires as a result of larger rims as well as wider tyre widths. In addition to the increased weight, rising costs of raw materials have been causing prices of tyres to rise over the past year,” noted Mr. Kee.

In the last 12 months, total value of the replacement car tyre industry in Jakarta alone reportedly totalled US$79 million with the price per tyre averaging $ 72, while in Malaysia’s Klang Valley, the market value came up to more than $224 million, with each tire costing $67 on average.

Looking forward, Mr. Kee concluded, “With vehicle population in developing countries on a constant uptrend, there is definitely more room for retail network expansion and also for the entrance of more players to meet the high demand of the constantly evolving automotive industry. The industry would be better able to provide truly localized, quicker and dedicated professional service to vehicle owners.