02/09/2020 Automotive - Indonesia - For Australian exporters - Austrade

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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 2019, 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 42 per cent share, followed by Affordable Energy Saving Cars 4X2 below and equal to
1200 CC with over 20 per cent share or over 200,000 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.
(Source: Gaikindo, Indonesian Automobile Industry Data. Register for free to search:  wholesale 2019,
category 2019. Accessed August 2020).

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 2019 were absorbed by
the market. GAIKINDO reports that 1,098,780 were produced domestically in 2019. (Source: Gaikindo,
Indonesian Automobile Industry Data. Accessed August 2020).

Over the past two decade, most of the poor and vulnerable have climbed out of poverty and into the
aspiring middle class, where there are approximately 115 million people in this category. (Source: World
Bank, Aspiring Indonesia: Expanding the Middle Class, January 2020). 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.

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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 2019
comes from major Japanese makers: Toyota, Daihatsu, Honda, Mitsubishi, and Suzuki, accounting to
nearly 50 per cent of total new vehicle sales. (Source: Gaikindo, Indonesian Automobile Industry Data.
Accessed August 2020).

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.

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)
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.

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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

Astra International
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
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exporters in growth and emerging markets.

For more information on how Austrade can assist you

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