Indonesia Two-Wheeler Tire Market Research Report: Forecast (2024-2030)

Market Insights & Analysis: Indonesia Two-Wheeler Tire Market (2024-30):

The Indonesia Two-Wheeler Tire Market size was valued at around USD 43.94 billion in 2023 and is estimated to grow at a CAGR of about 6.55% during the forecast period, i.e., 2024-30. The burgeoning usage of two-wheelers by individuals in Indonesia is the key factor affecting the demand & growth graph of the market. The government of Indonesia, per year, allocates a limited budget for the upgradation of the road & transport in the country. As a result, Indonesia has a poor road infrastructure, ensuing traffic congestion issues in major urban cities like Jakarta, Semarang, etc.

According to the survey by TomTom Traffic Index, in 2022, Indonesia witnessed approximately 57% congestion level, greater than 37% recorded in 2021. This traffic congestion problem has compelled individuals, especially the working population, to seek a transportation mode that minimizes travel time. Therefore, the sales of two-wheelers witnessed an upward surge during the historical years, leading to the growth in the demand for tires in Indonesia.

In addition, Indonesia comprises a majorly middle-income and low-income population since the country mainly operates in the informal sector, including unregistered & self-employed individuals. According to the East Asia Forum, in 2023, more than 60% of the total population in Indonesia falls into middle-class & low-income individuals with an expenditure capacity of USD 3.30-USD 38. As a result, individuals seek two-wheelers as an affordable transport solution rather than passenger cars, driving the sales of two-wheelers in Indonesia during 2019-2024.

In addition, the surging use of fuel-based vehicles in the country is leading to alarming carbon emissions & poor air quality. According to the International Energy Agency (IEA), in 2021, the carbon emissions from the transport sector in Indonesia were equivalent to approximately 135 metric tons. As a result, the government of Indonesia announced to have over 2 million electric motorcycles by 2030. Thus, in light of their vision, the government is gradually inclining towards sustainable means of transportation comprising electric motorcycles & scooters and consistently encouraging the adoption of electric two-wheelers. Further, the government of Indonesia is also providing subsidies to set up electric two-wheeler manufacturing units in the country. For instance:

• In 2023, the government of Indonesia allocated around USD 455 million to encourage the production of more than 800,000 new electric two-wheelers and convert over 200,000 petrol-powered scooters into electric ones.

This rising inclination of the government of Indonesia to boost the domestic production of electric two-wheelers would pose an opportunity for domestic two-wheeler tire manufacturers to supply their two-wheeler tires with these units, consequently enhancing the Indonesia Two-Wheeler Tire Market share in the forthcoming years.

Indonesia Two-Wheeler Tire Market Driver:

Extensive Usage of the Two-wheelers by Ride-hailing Companies to Thrive Market Growth – Over the past few years, Indonesia has emerged as a tourist destination due to the presence of various leisure, entertainment & attraction spots like Ubud Monkey Forest, Elephant Safari Park, Blanco Renaissance Museum, etc. The rising tourism in the country is driving the demand for ride-hailing services since tourists prefer to use ride-hailing services to explore the different places in the country. Ride-hailing companies such as Gojek, Grab, etc., offer two-wheeler renting services to tourists with fewer license-related formalities. As a result, foreigners tend to use ride-hailing services rather than private taxi services, driving the demand for two-wheeler ride-hailing services.

Moreover, the surging usage of the rental two-wheelers increases tire wear & tear, therefore the two-wheelers undergo frequent tire replacement, driving the Indonesia Two-Wheeler Tire Market. In addition, ride-hailing companies like Gojek, Uber Motorbikes, etc., are expanding their fleets to cater to the growing demand for rental services. Thus, the requirement for the tire for replacement purposes would increase in the future years.

Indonesia Two-Wheeler Tire Market Opportunity:

Favorable Government Policies for Electric Motorcycle Production to Amplify Market Growth – Indonesia has been experiencing the issue of poor-quality air due to rising emissions from industrial & transportation activities. Its Air Quality Index (AQI) has increased during 2019-2023, indicating the deterioration of air and leading the individuals living in these countries to experience breathing issues. According to a survey by the University of Chicago in 2022, Indonesia was ranked the twentieth most polluted country across the globe, and more than 91% of Indonesia’s total population lives in areas where the annual average particulate pollution level exceeds the WHO guideline.

Therefore, to improve the quality of the air & lower emissions, the government of Indonesia has been encouraging the adoption of electric vehicles rather than conventional fuel-based automobiles. The government is increasingly laying out its target plans to boost the production of electric two-wheelers in the country by providing lucrative incentives to encourage EV companies like Zero Motorcycles, EP Manufacturing, etc., to set up their manufacturing units in Indonesia. For instance,

• In 2023, Maka Motors announced to set up its manufacturing unit in Indonesia, and electric motorbike production is likely to start by 2024.

Thus, the surging electric two-wheeler production by the global companies in the Southeast Asian region would pose an opportunity for tire manufacturers such as CEAT, Hero, etc., to develop and supply electric two-wheeler tires for optimizing electric vehicle performance and safety, thus creating profitable opportunity for Indonesia Two-Wheeler Tire Market in the forthcoming years.

Indonesia Two-Wheeler Tire Market Challenge:

Increasing Usage of Retreaded Tires & Currency Depreciation to Hinder Market Growth – Individuals in Indonesia are price sensitive, and to save money, the consumers tend to purchase retreaded tires rather than new tires, hampering the Indonesia Two-Wheeler Tire Market. Retreading involves adding new tread to the existing tire casing, which extends the tire's average lifecycle. Thus, reducing the need for consumers to purchase new tires frequently and restricting the sales of the new tires.

Moreover, the economy of Indonesia has been facing challenges due to persistent trade deficits, higher inflation, and relatively lower interest rates. As a result, the currency of the country has been depreciating. This depreciation in the Indonesian Rupiah against the US Dollar is also negatively affecting the market since it increases the input costs for the tire manufacturers.

Furthermore, tire manufacturing companies such as PT Gajah Tunggal Tbk and others rely on raw materials sourced from other countries. Hence, currency depreciation is leading to higher import & production costs. To mitigate the negative impacts, these companies are increasing the prices of the tires, due to which the consumers are looking for pocket-friendly or alternate solutions like retreaded tires, adversely impacting the Indonesia Two-Wheeler Tire Market.

Indonesia Two-Wheeler Tire Market Trend:

Increasing Inclination of the Consumers Towards Sustainable Tires – In recent years, tire manufacturing companies such as Bridgestone, Continental, Nexen Tires, etc., have set sustainability goals to reduce their carbon footprint in the upcoming years. As a result, these organizations have been opting for sustainable manufacturing processes & producing sustainable tires. These tire manufacturers are increasingly focusing on the sustainable tire manufacturing process, which emphasizes reducing carbon emissions throughout the production process. In addition, manufacturing companies like Nexen Tires, Linglong Tires, etc., have also launched their sustainable tires as a step toward their sustainability goals.

These sustainable two-wheeler tires tend to improve energy efficiency & reduce fuel consumption owing to their unique design that provides lower rolling resistance. Hence, as these tires help save fuel & lower operating costs, consumers are gradually shifting toward these tires & would continue to incline toward them in the forecast years, further elevating the Indonesia Two-Wheeler Tire Market size.

Indonesia Two-Wheeler Tire Market (2024-30): Segmentation Analysis

The Indonesia Two-Wheeler Tire Market study by MarkNtel Advisors evaluates & highlights the major trends and influencing factors in each segment & includes predictions for the period 2024–2030 at national level. In accordance to the analysis, the market has been further classified as:

Based on Vehicle Type:

• Scooter & Moped
  • Internal Combustion Engine (ICE)
    • Up to 100 cc
    • 101 cc to 125 cc
    • 126 cc to 150 cc
    • Above 150 cc
  • Electric
• Motorcycle
  • Internal Combustion Engine (ICE
    • Up to 100 cc
    • 101 cc to 125 cc
    • 126 cc to 150 cc
    • Above 150 cc
  • Electric

The substantial presence of the Scooter & Moped in the country used for both personal mobility & business purposes has widely contributed to the revenue growth of the Indonesia Two-Wheeler Tire Market from this segment. The increasing demand for ride-hailing services in Indonesia has led companies such as GoShare & Gojek to expand their scooter fleet in Indonesia to cater to the transportation requirements of the residents.

Thus, the expansion of scooter fleets is further accelerating the requirement for scooters, consequently generating the need for tire replacement to maintain the optimal efficiency of the fleets. Hence, the rising adoption of scooter rental companies is enhancing the share of scooters & mopeds in the Indonesia Two-Wheeler Tire Market.

Based on Demand Type:

• OEM
• Replacement

The demand for Tire Replacement is higher in the country, enhancing the share of the replacement in Indonesia's Two-wheeler Market. The majority of the Indonesian population owns & prefers to use two-wheelers for daily commuting, leading to more tire wear & tears, infusing the replacement tire demand. The affordability of two-wheeler vehicles comprising motorcycles & scooters has enormously contributed to increasing ownership rates of two-wheelers in Indonesia.

In addition, the rising working population of the country & rapid urbanization are also fueling the demand for two-wheelers, eventually contributing to elevating the demand for replacement tires across Indonesia in the coming years.

Indonesia Two-Wheeler Tire Market Industry Recent Development:

• 2022: The company Michelin acquired Royal Lestari Utama (RLU), a project developing sustainable natural rubber in Indonesia. The acquisition would help the company to develop sustainable tire solutions and contribute to environmental protection.

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