indonesia automotive and component market
TRANSCRIPT
© 2009 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part
of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
Mario MontinoConsultant of Automotive & Transportation
MATRADE Program - Jakarta, 19th October 2009
Indonesia Automotive and Component Market:
Export Potential for Malaysian Companies
2
3
1 Indonesia Automotive and Component Market Overview
2 Opportunities and challenges for Malaysian companies
About Frost & Sullivan
3
General Overview on Indonesia: Country of Opportunities
• Indonesia is a very potential market
with total population of 228.5
millions people in 2008 according to
Statistic Agency.
• Around 58% of the population live
in Java island, although Java is only
7% of total land area in Indonesia.
• Average per capita income is IDR
15.5 millions per year or equivalent
to MYR 4,740.
• The main driver for Indonesian
economy is domestic consumption.
• Economy is growing at the rate of
6% for the last couple of years
4
GDP-Population Chart 2007 - 2012
Vietnam
Thailand
Philippines
Malayasia
Indonesia
0
200
400
600
800
1000
0 50 100 150 200 250
Population (mn)
US
$ (
bn
)
2007 2012
Indonesia slated to be one of the fastest growing countries in ASEAN;
A very important country for Automotive Market
• All 5 ASEAN countries are likely to grow at a CAGR of 5-7% in the year 2012
• Average growth in population is between 1-2% for all countries
• Region is going to see substantial increase in per capita GDP
• Indonesia and Vietnam are likely to grow the fastest by the year 2012
Size of bubble indicates per capita GDP
5
Total Indonesia’s Import Trend from Malaysia has shown
higher growth over Thailand for the last few years
0
2
4
6
8
10
12
14
16
18
2003 2004 2005 2006 2007
Imp
ort
Vo
lum
e (
mil
lio
ns
m.t
on
)
Thailand
Singapore
Malaysia
Indonesia Total Import Trend from Top 3 ASEAN countries
0
2000
4000
6000
8000
10000
12000
2003 2004 2005 2006 2007
Thailand
Singapore
Malaysia
Imp
ort
CIF
Va
lue
(m
illi
on
s U
S$
)
Source: BPS, Analysis: Frost & Sullivan
6
Indonesia’s Transport Equipment Import Value ranked
second compared to other SITC Group
0 5000 10000 15000 20000
CIF Value (millions US$)
Manufactured goods, classified by materials
Chemical
Machinery & transport equipment
Mineral fuel, lubricant, and related material
Value of Import by SITC Group (2007)
Food & Live Animals
Raw materials, inedible
Miscellanous
Source: BPS, Analysis: Frost & Sullivan
7
Indonesia’s Spare Parts & Accessories import trend
0
100
200
300
400
500
600
700
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0
500
1000
1500
2000
2500
3000
3500
4000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Imp
ort
Vo
lum
e (
tho
us
an
ds
m.t
on
)
Indonesia Parts & Accessories for Transport Equipment
Import Trend (volume)
Source: BPS, Analysis: Frost & Sullivan
Imp
ort
CIF
va
lue
(m
illi
on
s U
S$)
Indonesia Parts & Accessories for Transport Equipment
Import Trend (value)
• Indonesia had shown significant drop
in spare parts and accessories import
volume and value during 1998 – 1999
period due to economy crisis started
from Thailand.
• Although Indonesia has managed to
recover from crisis since 2000, but the
value of spare parts and accessories
import has never achieved the same
value as the previous value in 1996
• In overall, Indonesia is a very
promising market for imported spare
parts & accessories, especially hi-tech
components that could not be supplied
by local manufacturer.
8
Domestic Motorcycle sales history and Future potential
0
1000
2000
3000
4000
5000
6000
7000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Vo
lum
e (
tho
us
an
ds
un
its
)
Indonesia Domestic Motorcycle Sales 1998 - 2008
Source: AISI, Analysis: Frost & Sullivan
• Motorcycle has emerged as a viable
alternative method of transportation
due to its affordability, loan support
from financing companies and its fuel
efficiency.
• Japanese domination in motorcycle
manufacturing and sales is very strong,
especially after the failure of Chinese
motorcycles before 2001
• The Japanese players in motorcycle
are Honda, Yamaha, Suzuki, Kawasaki
while the non-Japanese players are
Kanzen, Piaggio, Bajaj, and TVS.
Kymco recently has stopped its
operation in Indonesia
• Current ratio of motorcycle ownership;
is 5 persons per 1 motorcycle
• Around 80% of total motorcycle sales
is being supported by credit
9
Domestic Car sales history and Future potential
0
100
200
300
400
500
600
700
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*
Vo
lum
e (
tho
us
an
ds
un
its
)
Indonesia Domestic Car Sales 1998 - 2009
Source: Gaikindo, Analysis: Frost & Sullivan
• Despite of low volume during 1998-
1999 and 2 times market drop in 2006
and 2009, in overall Indonesia has
shown strong growth trend over the
past 10 years
• The rise of petrol price and impact of
regional or global economy downturn
are the most common things that were
responsible for market drops
• Frost & Sullivan estimates of 2009
sales is 443,752 units; drop by 26.5%
compared to 2008
• Despite of 2009 performance, the
future of Indonesian automotive
industry is still promising due to the
current low ratio of passenger car
ownership; which is 28 persons per 1
passenger car; and government’s plan
to support low cost eco car project* Frost & Sullivan’s forecast
10
6.0%
-40.2%
35.8% 39.3%
10.5%
36.2%
11.6%
5.2% 6.7% 6.1% 4.5% 4.8% 6.3% 6.2%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
2002 2003 2004 2005 2006 2007 2008
Growth Rate of Total Automotive Market
Growth Rate of GDP
Fluctuating nature of Indonesia Automotive Market underlines factors
other than GDP growth rate are responsible for Growth or Decline
Automotive Market Growth Rate Compared with GDP growth rate (Indonesia), 2002 - 2008
Notes: Total Vehicles include Passenger Cars and Commercial Vehicles
Source: Gaikindo, Ministry of Finance; Analysis: Frost & Sullivan
Slowdown in
automotive market
due to rise in petrol
prices
Market rebound: low
interest rate for credit,
favorite new MPV models,
rising commodity export
Gro
wth
Rate
New MPV Avanza-
Xenia responded
positively by market
11
Indonesia Car Market is dominated by Multi Purpose
Vehicles and Japanese brands
Market Share by Brand (2009-est)
Others
7.8%
12.9%
3.5%
7.3%
9.9%
16.4%
4.6%
37.6%
Source & Analysis: Frost & Sullivan
Market Share by Type (2009-est)
MPV
221,876 units
(50%)
SUV
47,925 units
(10.8%)
CV
115,376 units
(26%)
Sedan
16,419 units
(3.7%)
Compact
40,825 units
(9.2%)
4x4 Luxury
1,331 units
(0.3%)
• Half of Indonesia car market is dominated by Multi
Purpose Vehicle (MPV) models, especially 7-seater
Avanza-Xenia models from Toyota and Daihatsu
• Government’s low tax and duty for MPV is the
main driver for making Indonesia as MPV-based
production
• Commercial vehicle ranked second with 26% of
market share with Mitsubishi as the leading brand.
• Japanese brands control and account for more
than 92% of the Indonesian total car market
• Toyota is the leader in Indonesia with more than
37% estimated market share, at the end of 2009
• Around 60% of Toyota sales was contributed by
Avanza, the most favorite model being
manufactured in Indonesia
• Daihatsu, currently the rising star in the market,
has managed to dislodge Mitsubishi from no.2
position in market share.
12
TIV : 411,638
TIV : 600,844
Source: Gaikindo; Analysis: Frost & Sullivan
TIV:296,008
+46%
+39%
Indonesia 2008 production: 46% growth over 2007 before
slowing down due to Global Crisis
• 2008 growth in production numbers is
higher than sales numbers
• This indicates that export of cars from
Indonesia has gone up
• From volume perspective growth in
4X2 is spectacular (113,000 units)
• From % growth perspective growth in
Sedan is the highest (277%)
• This highlights export potential of
Indonesia can be very high if right
policies are implemented
13
Japanese Manufacturers has established a very strong
presence – partnering mostly with ASTRA & INDOMOBIL
ASTRA Group
1. PT. Toyota Motor Manufacturing Indonesia
2. PT. Astra Daihatsu Motor
3. PT. Isuzu Astra Motor Indonesia
4. PT. Astra Nissan Diesel Indonesia
5. PT. Gaya Motor
INDOMOBIL Group
1. PT. Suzuki Indomobil Motor
2. PT. Nissan Motor Indonesia
3.PT. Hino Motor Manufacturing Indonesia
4. PT. National Assemblers
Own Factory
PT. Kramayudha Tiga Berlian Motors
( Commercial Vehicle only)
PT. Honda Prospect Motor
PT. Mercedes Benz Indonesia
PT. Hyundai Indonesia Motor
PT. Kia Mobil Indonesia
14
Indonesia Automotive component main source for
production is from the domestic supplier
Indonesia
76.9%
Japan
17.8%
Others
0.2%
Thailand
4.2%
Germany
0.5%
South Korea
0.5%
Indonesia Automotive Component Source 2008
77% of production in Indonesia are assemble locally while the balance
are via CKD / SKD assembly
Source & Analysis: Frost & Sullivan
15
Indonesia component industry value chain overview
Source : SENADA
16
Sample of Major Tier-1 and Tier-2 suppliers in Indonesia
Sample of Major ASTRA Group Tier-1 Suppliers
1. PT. Toyota Motor Manufacturing Indonesia
2. PT. Astra Daihatsu Motor
3. PT. Inti Pantja Press Industri
4. PT. Inti Ganda Perdana
5. PT. Tri Dharma Wisesa
Sample of Major Tier-2 suppliers
1. PT. Dharma Polimetal
2. PT. Dharma Precision Parts
3.PT. Federal Izumi Manufacturing
4. PT. Sugity Creative
Sample of other Major Tier-1 Suppliers
1. PT. Mitsubishi Krama Yudha Motor & Mfg.
2. PT. Honda Prospect Motor
3. PT. Denso Indonesia
4. PT. Selamat Sempurna Tbk.
5. PT. Bakrie Tosanjaya
17
Indonesia First Tier or OEM Manufacturers Overview
• First-tier or OEM manufacturers dominate the market for branded or “genuine” parts.
• OEM producers concentrate on highest-value, fast moving products, including:
- Electrical systems (batteries, battery cables, wiring harnesses, starters, halogen lamps, etc.),
- Engine systems (air, oil, and fuel filters, valves, gaskets, pistons, etc.),
- Brake systems (brake shoes, pads, and linings, disc brakes, etc.),
- Cooling systems (air conditioning components, radiators, etc.),
- Body and frame components (chassis, doors, windows, etc.),
- Suspension systems (shock absorbers, front forks, dampers, etc.), and
- A wide variety of plastic, rubber, and forged steel products.
• First-tier component suppliers are typically joint venture or foreign investment companies.
• The majority of these joint ventures are under ASTRA International or Indomobil Group
• These ventures are primarily concerned with producing parts for the first-tier assembly
market and are sold under well-known OEM brands.
• First-tier suppliers also sell genuine parts directly to consumers though certified first-tier
wholesalers, and in the aftermarket through subsidiaries.
18
• Second-tier suppliers that are capable of complying with strict requirements, play
an important role in assisting first-tier companies.
• Most second-tier suppliers are unable to produce all parts necessary for a single
automobile or motorcycle.
• First-tier suppliers usually contract several second-tier manufacturers
simultaneously to produce all of the parts and components required to assemble
entire vehicles in order to maximize quality and efficiency.
• Second tier suppliers are also play independent role and produce a number of
parts for the aftermarket. These parts are sold through OEM and non-OEM second-
tier wholesalers and are marketed as branded and unbranded.
• Examples of OEM brands include: ASPIRA from PT. Astra Otoparts Tbk.,
Indoparts from Indomobil Group, while examples of non-OEM brands include
Sakura Filter or ADR Radiators from ADR group of companies.
Indonesia Second-Tier or Third-Tier Suppliers Overview
19
• The domestic aftermarket provides customers with alternatives to expensive genuine parts.
• Most of the parts in the after market came from China, Taiwan, Thailand, and Vietnam with
very cheap price, sometimes could be lower than 20% of the price of the same parts with
genuine tag.
• Given the increase in cheap imports, Indonesian second and third-tier component
manufacturers are losing their ability to compete on price at the bottom-value level of the
aftermarket.
• These second and third-tier companies have started to move into the mid-value domestic
aftermarket segments. This market niche switch has been pioneered by brands and
franchises such as Indoparts, FAST, and Sakura.
• This new segment is an important market opportunity for second and third-tier producers
because it is high value enough to relieve market pressures from hyper-price sensitive
imports, and not too high, where producers will have to compete head-to-head with first-tier
OEM producers
Indonesia After Market Component Overview
20
Component distribution overview
• Genuine parts are distributed through authorized dealers and ATPM authorized
workshop networks
• There is a general market trend that owners of motorized vehicles have inclination
to use genuine OEM parts for the first three years of their ownership of new
vehicles. This corresponds with typical warranty periods offered by the OEM.
• After warranty periods expire, customers typically switch to less-expensive,
imitation parts.
• Based on a research done by US Aid, in 2007, around 10.5 million owners of 2-
wheeled vehicles, and 1.5 million owners of car would switch from the OEM parts to
the imitation parts
• This is one of the main reasons the demand for domestic and imported non-OEM
parts has increased rapidly for past few years.
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3
1
Opportunities and challenges for Malaysian companies2
Indonesia Automotive and Component Market Overview
About Frost & Sullivan
22
Component business opportunities & challenges in
Indonesia
1. Parts that have the best opportunity for Malaysian companies will be:
• Fast Moving Part that is replaced within three months or 10,000 km.
for example: Fuel filter, Air filter, Oil filter, etc.
• High Value Part with high profit margin or high volume
for example: universal accessories and fitments
2. Malaysian companies should be aware of the quality perception by Indonesian people, that
it would be better to promote the brands properly to the distribution partner and customers
in Indonesia. For example, currently some Indonesian customers sees non-Japanese car
or component as “second grade” compared with Japanese brand.
3. To play a significant role as second-tier or third tier supplier, a good market penetration
strategy can come in the form of opening representative office or partnering with qualified
local player, depends on the products and target market.
4. Proper pricing strategy and proper market research at the targeted parts segment ideally
shall be done before entering the market to maximize the result with minimum “trial &
error”.
23
3
1
About Frost & Sullivan
2 Opportunities and challenges for Malaysian companies
Indonesia Automotive and Component Market Overview
24
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