INDONESIA: Tire manufacturing industry remains under pressure

Sales of tires in Indonesia are expected to remain bleak in 2016, according to industry sources.

Azis Pane, Chairman of the Indonesian Tire Companies Association (APBI), said sales of tires this year may only reach 8.5 million units (roughly the same sales figure as in the preceding year), while exports of Indonesian-made tires may fall to 30 million units (from a "normal" figure of 45 million).

Domestic tire sales are highly dependent on the nation's car and motorcycle sales.

Both Indonesia's car and motorcycle sales have been on the decline in recent years amid Indonesia's economic slowdown, declining purchasing power, and softer consumer confidence.

Pane is optimistic, however, about accelerating tire sales in Indonesia in the second half of the year, supported by the positive impact of the various economic policy packages that have been unveiled by the Indonesian government since late last year.

These packages, if implemented in full, will boost Indonesia's economic growth and raise purchasing power. This will lead to higher car sales figures and subsequently raise domestic demand for tires.

Previously, the Indonesian Automotive Industry Association (Gaikindo) said it expects car sales in Indonesia to rise by about 5 percent (y/y) in 2016, after two consecutive years of falling car sales in the preceding two years.

Regarding tire exports, Pane estimates that Indonesia's export figure in 2016 will be rather similar to the figure posted last year (around 30 million units). In the 2011-2014 period Indonesia exported an average of approximately 45 million tire units per year.

Source: Daily “Indonesia Investments”, Jakarta; 28 Mar 2016
(Syed Rashid Ali, Karachi, Pakistan)