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Australian manufacturers urged to pursue Indonesian automotive aftermarket

Market research by the Australian Automotive Aftermarket Association (AAAA) on the automotive aftermarket in Indonesia has identified export opportunities for Australian companies.

Australia's northern neighbour has the fifteenth largest economy in the world with a gross domestic product expanding at over 6% annually and a growing middle class. These economic trends are expected to drive an increase in car sales of up to 50% in Indonesia in the next five years.

The AAAA was commissioned by the Victorian Government Department of Business and Innovation to undertake the research to accurately gauge the potential of the Indonesian automotive aftermarket for Australian supplied products and services. The project was assisted by the Austrade Jakarta office.

AAAA Senior Manager Government Relations and International Ben Bartlett said the Indonesian automotive aftermarket is growing rapidly and still evolving. "Indonesia is home to 245 million people and the car parc is about 11.25 million vehicles.

This is about 32 vehicles per 1,000 citizens, which is significantly lower than some near neighbours, such as Thailand (123), Malaysia (300) and Australia (700)," he said.

"While new car sales are approaching one million a year, there is still strong incentive to keep older vehicles serviceable and on the road. Transport hungry middle class Indonesian families are a growing market for aftermarket accessories, parts and repair and maintenance products and services.

"In addition, the high percentage of the population under 35 years old will ensure keen demand for aftermarket parts and accessories to differentiate for their vehicles," said Ben Bartlett.

The AAAA research revealed that the Indonesian car parc is diverse, but the two main vehicle categories are:

  • Multi Purpose Vehicles (MPVs) for families and small businesses in urban areas.  The products most in demand included in-car entertainment, wheels, window tinting, cleaning and polishing products and oils and lubricants.
  • 4 Wheel Drive (4WD) and Sports Utility Vehicles (SUVs) vehicles used extensively in rural Indonesia's agriculture and mining industries. Among the popular products are suspension components, differential lockers, undercar protection and winches. 

AAAA research, which included interviews with Australian manufacturers that are already successful exporters, and Indonesian businesses, found that this market is very price sensitive.

Thus the high Australian dollar may challenge would-be exporters. On average, the Indonesian government imposes a 30% tariff on aftermarket imports. Goods shipped through Singapore may avoid this impost.

The AAAA research identified a range of opportunities for Australian aftermarket companies. Immediate business exists in the 4WD segment, particularly servicing the agricultural and mining industries.

There will also be good opportunities in the retail and repair and service sectors in coming years as these markets continue to develop.

Indonesian car sales by type

Indonesian car sales by type: Vehicle sales trends in Indonesia indicate strong growth for 4X2 and 4X4 MPVs and SUVs.

Based on the positive findings in this report, the Victorian Government is considering initiating an export mission to Indonesia, should there be sufficient interest. More information [pdf].

Australian manufactured products currently exported to Asia, Europe, Middle East and the USA include engine cooling systems, superchargers, oils and lubricants, shock absorbers, springs, suspension bushes, hoses, and 4WD parts and accessories.

"Indonesia offers Australian aftermarket companies a fast growing export market close to home. There will be benefits to those companies entering the market early," said Bartlett.

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