Indonesia Tire Market By Vehicle Type (Passenger Vehicle, Commercial Vehicle, Two-Wheeler), By Demand Category (OEM, Replacement), By Tire Construction Type (Radial, Bias), By Region, Competition, Forecast & Opportunities, 2019-2029F

Market Overview

Indonesia Tire market was valued at USD 3.85 Billion in 2023 and is expected to reach USD 5.82 Billion by 2029 with a CAGR of 7.11% during the forecast period. The Indonesian tire market is experiencing strong growth, driven by increasing vehicle ownership, especially motorcycles. Motorcycles are the primary mode of transportation in urban areas due to their affordability and ability to navigate traffic. As motorcycle sales rise, so does the demand for replacement tires. The growing middle class, better access to financing, and government initiatives to promote electric vehicles (EVs) are further driving tire demand in the passenger vehicle sector. EVs require specialized tires for optimal performance, creating a new market opportunity.

Indonesian consumers are increasingly opting for higher-quality, fuel-efficient, and durable tires. This shift is fueled by a rising focus on long-term cost savings and vehicle safety. Tire manufacturers are responding by developing low rolling resistance and eco-friendly tires. E-commerce platforms are also reshaping the market, allowing consumers to purchase tires conveniently online, driving sales and brand visibility.

However, challenges persist, including the widespread presence of counterfeit and low-quality tires that pose safety risks. The volatility of raw material prices, such as rubber, also impacts production costs. Additionally, road conditions in rural areas cause quicker tire wear, prompting manufacturers to design more durable products. Despite these challenges, the Indonesian tire market presents significant opportunities for innovation and growth, especially in the two-wheeler and passenger vehicle segments.

Market Drivers

Rising Motorcycle Ownership

Motorcycles are the most popular mode of transportation in Indonesia, particularly in dense urban areas and rural communities. With traffic congestion in cities like Jakarta and Surabaya, motorcycles offer a faster, more affordable alternative for daily commuting. The growing middle class and increasing disposable income have enabled more Indonesians to afford motorcycles. This has directly driven the demand for motorcycle tires, including replacement tires, because of the high usage and the frequent need for tire maintenance.

Increase in Passenger Vehicle Sales

With an expanding economy and rising disposable incomes, the demand for passenger vehicles, particularly cars, is also increasing in Indonesia. Financing options, such as installment payments and low-interest loans, have made vehicles more accessible to the middle class. As more families and individuals purchase cars, the need for tires—both original equipment and replacement—has surged. The demand for tires that offer better fuel efficiency, safety, and performance has also increased, contributing to the growth of the tire market for passenger vehicles.

Urbanization and Infrastructure Development

As urbanization in Indonesia continues to accelerate, more people are moving to cities and purchasing vehicles. At the same time, ongoing government investments in infrastructure—such as road construction, public transportation projects, and the expansion of highways—are making car ownership more practical. Urbanization increases vehicle numbers, leading to a higher demand for tires, both for new vehicles and replacements. As road conditions improve, tire longevity and performance become more important for urban consumers, further driving the tire market. For instance, Indonesia has designated a state budget of 25.5 billion USD for infrastructure development in 2025, which encompasses the ongoing construction of infrastructure in the new capital city of Nusantara, located on Kalimantan Island.

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Key Market Challenges

Raw Material Price Volatility

The tire industry is heavily dependent on raw materials like rubber, oil, and synthetic polymers, all of which are subject to price fluctuations. Global market volatility in these materials can lead to higher production costs for manufacturers, which may, in turn, raise tire prices for consumers. In Indonesia, where price sensitivity is high, manufacturers may find it challenging to balance the cost of production with the need to remain competitive while maintaining profitability.

Competition from Imported Tires

The Indonesian tire market faces significant competition from imported tires, particularly from neighboring countries in Asia. These imported tires, often at lower price points, can undermine local manufacturers' market share. While local brands may focus on product quality and innovation, they face challenges in competing with cheaper imported options, which can attract price-sensitive consumers. This competitive pressure makes it difficult for domestic manufacturers to capture and maintain market share.

Key Market Trends

Increasing Use of Radial Tires

Radial tires are becoming more popular in Indonesia, particularly for passenger vehicles, due to their superior performance, longer lifespan, and better fuel efficiency compared to bias tires. As consumers and OEMs (original equipment manufacturers) seek tires that offer better stability and handling, radial tires have gained a larger market share. Radial tires’ lower rolling resistance and higher durability make them an attractive option for both new vehicle purchases and replacement tires in the Indonesian market. For instance, in March 2024, Sailun Group revealed its intention to establish a manufacturing facility in Indonesia, which will have the capacity to produce 3 million semi-steel radial tires, 600,000 all-steel radial tires, and 37,000 tonnes of off-the-road (OTR) tires each year. The company plans to allocate an investment of USD 251.44 million for this initiative, with USD 204.29 million designated for the construction of the plant located in Demak, Central Java.

Eco-Friendly and Sustainable Tire Solutions

As environmental awareness grows, both consumers and manufacturers are prioritizing sustainability in tire production. Tire companies are exploring ways to reduce the environmental impact of tire production and disposal, with an emphasis on using renewable materials, such as bio-based rubbers and eco-friendly manufacturing processes. Additionally, tires that offer better fuel efficiency and lower carbon emissions are becoming more popular, as consumers are increasingly aware of the environmental footprint of their vehicles.

Segmental Insights

Vehicle Type Insights

The Indonesian tire market is segmented into passenger vehicles, commercial vehicles, and two-wheelers, each with distinct demands. The passenger vehicle segment is driven by rising disposable incomes and growing vehicle ownership, leading to higher demand for tires that balance performance, safety, and fuel efficiency. Consumers are increasingly seeking premium tires that offer durability and improved fuel economy, especially in urban areas with varying road conditions. As more vehicles are purchased, both original equipment and replacement tire demands continue to rise.

The commercial vehicle segment, which includes trucks, buses, and light commercial vehicles, is shaped by infrastructure growth and the expansion of logistics and e-commerce sectors. Tires in this segment are designed to handle heavy loads, long distances, and harsh road conditions, with durability and cost-effectiveness being key considerations for fleet operators. The two-wheeler segment, encompassing motorcycles and scooters, remains vital due to their widespread use across Indonesia. Motorcycles are favored for their affordability and efficiency, driving continuous demand for tires, particularly in replacement markets. As motorcycles face diverse road conditions, tire durability and performance are critical, leading to a steady need for quality two-wheeler tires.

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Region Insights

In 2023, Java emerged as the dominant region for tire sales in Indonesia. As the economic and industrial hub of the country, Java plays a crucial role in the automotive and tire markets. This island is home to the majority of Indonesia’s manufacturing facilities, including those of automotive producers, and accounts for a significant portion of the nation's automotive demand. Jakarta, the capital, is a major center for business and transportation, driving a large demand for both passenger and commercial vehicle tires. The high density of vehicles on the road in this region, combined with its economic activity, leads to the frequent replacement of tires and increased demand for new models.

The urbanization and infrastructure development in Java has led to more vehicles being used across various sectors, including private transportation, logistics, and public transport. The rise in e-commerce and the expanding retail sector further boosts the need for transportation, and with it, the demand for durable and efficient tires. This makes Java not just a leader in terms of volume, but also a critical market for innovations in tire technology, with an emphasis on tires that offer better fuel efficiency, longer life spans, and greater road safety, particularly for vehicles navigating the region's densely trafficked streets.

The region’s transportation system, comprising both roadways and commercial vehicles, has a significant impact on tire consumption patterns. In Java, consumers typically demand a variety of tire types suited for different vehicle categories, including cars, trucks, and buses. The growth in logistics and distribution networks, especially in cities like Surabaya, Bandung, and Yogyakarta, also contributes to the rise in tire sales, as these sectors depend on reliable transportation networks for goods movement. Additionally, the continued expansion of mass transit systems and the push for electric vehicles (EVs) further shape the tire market on the island, as tire manufacturers adapt to new trends and technological advancements.

Recent Developments

• In November 2024, Zhongce Rubber Group Co., Ltd. (ZC Rubber) announced that its newly established Indonesian subsidiary, PT. Matahari Tire Indonesia (MTI), has successfully manufactured its inaugural all-steel radial tire. Although the facility is currently in the ramp-up stage, the production of this initial tire represents a noteworthy advancement in addressing the increasing demand for high-quality tires in both domestic and global markets.
• In August 2024, PT Gajah Tunggal Tbk launched its Giti passenger car tire brand in Indonesia, offering a premium choice for industry experts focused on advanced technology. The GitiSportS2, engineered in Germany, is an ultra-high-performance tire designed to enhance luxury vehicles with outstanding control, excellent wet traction, and superior braking performance.
• In 2024, Chinese electric vehicle manufacturers BYD and Neta Auto unveiled their latest models and revealed new investment initiatives during an auto exhibition in Jakarta. Additionally, Indonesian property developer Suryacipta Swadaya disclosed that BYD is set to establish a factory valued at USD 1 billion on a 1.08 square kilometer site in West Java province. The construction is scheduled to begin in August 2024, with operations expected to start in January 2026.

Key Market Players

• PT Gajah Tunggal Tbk
• PT Bridgestone Tire Indonesia
• PT Sumi Rubber Indonesia
• Hankook Tire & Technology
• Pirelli Tyre S.p.A
• Goodyear Tire and Rubber Company
• PT Continental Tyres Indonesia
• YHI Indonesia, PT.
• Toyo Tires Indonesia
• PT Michelin Indonesia

Report Scope:

In this report, the Indonesia Tire Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

·         Indonesia Tire Market, By Vehicle Type:

o   Passenger Vehicle

o   Commercial Vehicle

o   Two-Wheeler

·         Indonesia Tire Market, By Demand Category:

o   OEM

o   Replacement

·         Indonesia Tire Market, By Tire Construction Type:

o   Radial

o   Bias

·         Indonesia Tire Market, By Region:

o   Java

o   Sumatra

o   Sulawesi

o   Kalimantan

o   Rest of Indonesia

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Indonesia Tire Market.

Available Customizations:

Indonesia Tire Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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