Automotive to Indonesia

Trends and opportunities

The market

Indonesia is one of the largest automotive markets in the world. The Indonesian Automotive Industries Association (GAIKINDO) reports that in 2015, over one million cars were sold domestically and over 300,000 cars were exported. Compact Multi-purpose vehicles (MPVs) below 1,500cc dominated the sales with over 43 per cent share, followed by medium sports utility vehicles (SUVs) below 2,500cc with over 10 per cent share or over 100,000 units sold. MPVs and SUVs remain favourite due to their large seating capacity, up to seven seats, which are viewed as more suitable for Indonesian families.

Despite the current economic slowdown, the potential for Indonesia’s automotive industry to keep growing at rapid rates is strong, given that over 90 per cent of cars produced in 2015 were absorbed by the market. GAIKINDO reports that 1,098,780 were produced domestically in 2015. 

With Indonesia’s consuming class set to grow from 45 million to 135 million by 2020 (source: McKinsey Global Institute, 2012), middle class Indonesians in greater Jakarta and other major cities like Medan, Surabaya, to Makassar will create mass markets in their own right for Indonesia’s automotive sector.

As purchasing power grows, an increasing growth of first-time car owners are highly expected. Compared to the high per capita motorcycle ownership ratio of over 80 per cent, Indonesia still has a very low per capita car ownership ratio with less than four per cent of the population owns a car, implying an enormous potential for shifting from two-wheelers to four-wheelers. 

This growth will eventually escalate the demand for manufactured parts and aftermarket products to cater to an ever expanding domestic manufacturing and retail base in Indonesia. 

 

Competitive environment

Japanese companies have long become predominant investors in Indonesia’s automotive industry with over 90  per cent share in the Indonesian automotive market. The top five new vehicle sales in 2015 comes from major Japanese makers: Toyota, Daihatsu, Honda, Mitsubishi, and Nissan, accounting to nearly 50  per cent of total new vehicle sales (source: GAIKINDO).
Japanese and Indonesian joint venture companies dominate the tier one and tier two original equipment (OE) and OE replacement parts supply chains in Indonesia given their history and their ties to the lead manufacturers. Joint ventures are often done through Indonesia’s two major automotive conglomerates, Astra Otoparts (Astra Group) and Indoparts (Indomobil Group).

Opportunities

Although Indonesia manufactures most of its original equipment (OE) and OE replacement components domestically, there is a considerable demand for imported aftermarket components, particularly performance and specialty parts and accessories. 

Sought after products are mostly parts and accessories for SUVs, both 4x2 and 4x4. The high popularity of Toyota Fortuner and Mitsubishi Pajero Sport has encouraged the owners to customise their vehicles. Popular products include suspensions, bull bars, specialty lightings, race chips, roof racks, winches and 4x4 gears, drivetrains, turbochargers, superchargers and performance exhausts. 

The demand for these aftermarket products presents an export opportunity for Australian parts and accessories manufacturers, as well as investment opportunities for companies who are thinking of manufacturing relocation to achieve economies of scale and global competitiveness.

Tariffs and non-tariff barriers

Tariffs

To find out the specific tariffs pertaining to the export of your automotive product to Indonesia, visit the Australian Government Department of Foreign Affairs and Trade Free Trade Agreement Portal

Marketing your products and services

Market entry

To successfully market to Indonesia’s automotive industry, you may wish to consider:

  • participating in major local automotive trade exhibitions such as INAPA, GIIAS and IIMS
  • highlighting your international track record to customers, especially in the ASEAN region
  • engaging a local distributor (crucial to effective business penetration in Indonesia)
  • visiting the market on a regular basis and investing time (relationship based market)
  • consider opening a representative office or presence in Indonesia
  • engaging Austrade in tailored services to help you identify opportunities or connect you with key distributors and buyers.

Distribution channels

The distribution channels for imported auto aftermarket products are widely dispersed across major cities in Indonesia. However, most of these distributors are not importers. There are only a handful of credible and reputable importers of auto aftermarket products in Indonesia which supply to smaller distributors nation-wide. Austrade can assist you in identifying the suitable partner based on your products and business expectations.

For companies looking to relocate their manufacturing into Indonesia, there are different manufacturing areas across Indonesia, each one offers its own benefits and downsides. Austrade is able to assist you in assessing which one is more suitable based on your business plan.

Links and industry contacts

BKPM (Indonesia’s Trade and Investment Agency)
GAIKINDO (Indonesian Automotive Industry Association)
GIAMM (Indonesian Automotive Parts & Components Industries Association)
Indomobil Group

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

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Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.