|Title:||Indonesia automotive tire production by type in units and percent change for 2009 and 2010|
|Source:||Indonesian Commercial Newsletter|
Start of full article - but without data
Tire production by types, 2009 and 2010
Year X-wheeler Change (%) X-wheeler Change (%) (million units) (million units)
2009 XX.XX XX.X 2010 XX.XX XX.X XX.X XX.X
Sources : APBI/Data Consult
The rapid growth of the country's automotive sectors both four wheeler and two wheeler industries has boosted demand for tires in the country. Car sales reached XXX,XXX units and motorcycle sales totaled X.XX million units in 2010. A motor vehicle needs two to five units of tires.
In the five year period of 2006-2010, the country's tire production grew X.X% a year. Based on data from the Association of Tire Producers APBI), the country's tire production totaled XX.XX million units in 2006, up to XX.X million units in 2010, or an increase of XX.X% from the previous year. The increase in the production was boosted by growing demand on the domestic.
The increase in the production also followed new investment in tire industry. The availability of the main basic material rubber also contributed to the expansion of tire industry in the country the abundant availability of the basic material has attracted investors such as Hankook Tire, a tire producer from South Korea. Hankook started building its tire factory in Cikarang, West Java.
Meanwhile, the country's exports of tire has fluctuated, but tended to increase. In 2010, the country's tire exports reached XX.X million units or an increase of XX% from XX.X million in the previous year. Most of the country's tire production has been exported
Despite the good market abroad, sales on the domestic market are also encouraging. APBI predicted that the country's tire industry will grow XX% in 2011 with production reaching XX.X million tons to follow the growing demand for car and motorcycle tires APBI said, Indonesia needs two to three new tire factories to keep pace with the market demand.
Tire Producers and Production Capacity
The country has XX producers of tires grouped in APBI with a total production capacity of XX million units of four wheeler tires and XX million units of two wheeler tires in 2010. Around XX% of the production was disposed of on the domestic market used both as original equipment by car and motorcycle makers and as replacement tires. The bulk or XX% of the production is exported to various countries including the United States, Europe, Middle East, Africa and other Asean countries.
In term of capacity PT Gajah Tunggal (GT) is the largest tire producer in the country. GT has an annual production capacity of X.X million units of tire casings and X.X million units of inner tubes of four wheelers; X.X million units of tire casings and X.X million units of inner tubes of two wheelers and XXX,XXX units of tire casings and XXX,XXX units of inner tubes of bicycles.
GT was established in 1951 with the name of NV Perusahaan Pabrik Karet "Hok Thay Hin". The name of the company was changed in 1961 with PT Gajah Tunggal. The tire producer operates car tire factory since 1978 in Tangerang, Banten. The company with the status of domestic investment (PMDN) company started producing motorcycle tires in 1972.
GT has a number of subsidiaries to support its operations including PT Andayani Megah, which operates a factory producing nylon tire cord, one of the main basic materials of tires and Langgeng Bajapratama that produces bead wires. PT Sentra Sintetika Jaya, a subsidiary of PT GT Petrochem, which is also a member of the GT group, produces synthetic rubber (SBR).
The types of tires produced by Gajah Tunggal include tires for motorcycle, sedan, light truck, bus, big truck and heavy duty carriers. Most of the country's tire production is exported. The company has the largest share in the market of tire for motorcycles, trucks, and buses. It is planning to expand its production capacity for sedan tires especially radial tires. All of tire products use the brand of GT.
Recently GT sold its subsidiary operating in steel wire industry and took over the entire assets of GT Petrochem Industries in tire industry. GT took over the fixed assets of tire cord division of PT GT Petrochem Industries (GTPI) at a price of Rp X.XX trillion. It has also taken over the fixed assets of Sentra Sintetikajaya (SSJ), a producer of synthetic rubber, Styrene Butadiene Rubber (SBR) at a price of Rp XXX billion. GT is able to operate more efficiently after the acquisition of the subsidiary of GTPI and Sentra Sintetikajaya as it no longer depends on other companies for tire cord and, and synthetic rubber with value added tax of XX% .
Under its restructuring program, GT divested its entire XX% stake in PT Langgeng Bajapratama (LBP), which operates in steel wire manufacturing to PT Gajah Tunggal Prakarsa (GTP).
Meanwhile, PT Bridgestone Tire Indonesia, which has the status of foreign investment (PMA) company has a tire factory in Bekasi, West Java producing X.X million units of tire casings for four wheelers, X.X million units of inner tubes for four wheelers, XXX,XXX units of tire casings for two wheelers and XXX,XXX units of flap per year.
PT Goodyear Indonesia has a production capacity of X.X million units of tire for four wheelers, XXX,XXX units of tire casings for two wheelers, XXX,XXX units of flap and X,XXX units of bladder per year. The PMA Company with principal in Ohio, the United States, is the first tire producer in Indonesia starting operation in XXXX. Its factory is located in Bogor, West Java. Goodyear has decided to make Indonesia as its production base for this region after the implementation of the Asean FTA (AFTA).
PT. Hung-A Indonesia is a major producer of motorcycle tires. The PMA Company has an annual production capacity of X.X million units of tire casing for two wheelers, X.X million units of inner tubes for two wheelers, XXX,XXX units of tire casings for four wheelers and X.X million units of inner tubes for four wheelers. Its tire products use the brand of Thunderbird.
The prospect of business in motorcycle tire industry in Indonesia is encouraging with the number of motorcycles in the country grows by up to X.X million a year.
The largest tire producers in the country are PT. Gajah Tunggal with its brand of GT dominating the market. The second largest producer is PT. Bridgestone Tire Indonesia with its brand of Bridgestone, followed by PT. Goodyear Indonesia. Bridgestone and Goodyear produce no motorcycle tires.
Other producers include PT. Industri Karet Deli with the brand of Swallow, PT. Suryaraya Rubberindo Industries with the brand of Federal, PT Elang Perdana Tyre Industry, PT Banteng Pratama, South Korea's PT. Hung-A Indonesia using the brand of Thunderbird and PT. United King-Land using the brand of Kingland.
Meanwhile, two producers PT Intirub and PT Mega Safe Tyre Industry have stopped operation since 2006 on financial problem. PT Intirub had a production capacity of X,XXX units and PT Mega Safe Tyre Industry X,XXX tons per month. PT. Intirub collapsed after the bankruptcy of PT. Mega Safe, which was the majority XX.XX% shareholder of Intirub. In 1999. Mega became a subsidiary of Argo Manunggal Group, formerly owned The Nin King. Other shareholders of Intirub included PT Trisetijo Manunggal Utama (XX.XX %) and the government (X.X %).
Production up X.X% on the average per year
APBI said the country's tire production in the period of 2006-2010 grew X.X% annually--from XX.XX million units in 2006 to XX.XX million units in 2007 and to XX.XX million units in 2008. In 2009, the production shrank X.X% to XX.XX million units before rising to XX.X million units in 2010. The decline in 2009 followed the falling demand for cars in 2010, the condition improved marked with a surge in car and motorcycle sales. Car sales peaked at XXX,XXX units in 2010 or an increase of XX.X% on-year.
In 2011, APBI predicted that the country's production of car tires will surge XX%XX % to XX.X million. The country's production of car tires in 2010 rose XX.X% and that of motorcycle tires shot up XX.X% from 2009.
Financing firms and banks as well as dealers offer credits with attractive terms for the purchase of cars and motorcycles the down payment is lower at only XX% of the price of vehicle, the interest rate are relatively low at X.XX%--X% per year and period of installments from XX months to XX months. Some dealers also offer discount, cash back bonus, etc.
Around XX% of the country's tire production for two wheelers is disposed of on the domestic market, but most or XX% of car tire production is exported. Strong demand in exports market has been the main driver of growth in the country's car tire production
The fact that Indonesia is the second largest producer of natural rubber contributed to development of the country's tire industry. In 2010, Indonesia produced X.XX million tons of rubber.
Sales dominated by exports
Only XX% of the country's car tire production is disposed of on the domestic market. The rest is exported including to Japan, Europe, the United States, other Asian countries and Africa.
Demand for car tires on the domestic market has continued to increase especially with the strong growth recorded in the country car industry. Car tires are used by car makers as part of original equipment (OEM), but demand is larger for replacement tires.
In 2006, XX.X% or XX.X million units of the country total production of XX.XX million units of car tire were exported with X.X million units used as original equipment by local car makers and X.XX million units disposed of on the domestic market as replacement tires.
In 2007, tire sales totaled XX.XX million units and XX.X% or XX million units of which were exported with X million units disposed of on the OEM market and X.XX million on replacement market.
In 2008 and in 2009 tire sales totaled XX.XX million and XX.XX million units respectively. Exports dropped to XX.X million units and XX.X million units respectively. The decline in export was as a result of global economic slow down that began in 2008 Meanwhile, the market demand from car makers in he country reached X.X million units in 2008 and X.X million units in 2009. The sales to replacement market reached XX million units in 2008 and X.XX million units in 2009.
In 2010, demand for car tires surged both in the country and export markets. That year sales totaled XX.XX million units and XX.X% or XX.X million units of which were exported the exports raised XX.X% on-year. Demand also rose from car makers abroad to X.X million units and from replacement market to XX.X million units.
Tire sales to the spare part market abroad grew XX.X% to XX.X million units in 2010 from X.X million units in 2009. Sales to car makers grew XX.X% to X.X million from X.X million units.
Tire sales in Indonesia in the first quarter of 2011 rose X% on year. Exports in the whole of the year are predicted to reach XX million -XX million units worth US$ X billion--US$ X.X billion falling short of the target figure of US$X.X billion.
Production dominated by car tires
In 2009-2010, tire production was dominated by car tires. The production car tires grew XX.X % per year--from XX.XX million units to XX.XX million units.
Meanwhile, the production of motorcycle tires surged XX.X% to XX.X million units from XX.X million units.
Six of eight tire producers posted large sales. The six companies include PT. Gajah Tunggal (IRC). Suryaraya (Federal), Banteng Pratama (Mizzle), Industri Karet Deli (Swallow), Sumi Rubber (Dunlop), and Surabaya Kencana (Primax). A producer PT Hung-An Indonesia posted a decline in sales.
Investment Interest High
Investors have indicated strong interest in producing tires in the country in the past three years. A number of investors have built new factories and old producers expanded their capacity. Large producers like PT. Gajah Tunggal, PT. Bridgestone and PT. Good Year Indonesia have expanded their factories to increase production capacity.
Investors, however, complained about poor condition of infrastructure. Distribution of natural rubber from the plantations is hampered by poor road condition. In addition, there is no support from banks to finance development of inner tube industry in the country.
PT Multistrada Arah Sarana Tbk (MAS) in 2011 set aside US$ XXX million for capital spending. A MA has secured a loan of US$ XXX million from a bank syndicate. The five year loan is pledged by PT Bank International Indonesia Tbk, PT Bank Cimb Niaga Tbk, and HSBC. MASA has also secured a six-year loan from Unicredit AG of Germany worth US$ XX million
The funds will be used for business expansion in two phases starting last year. In the first phase the company plans to increase its production for car tires to XX,XXX units per day from XX,XXX units per day at present. Its production capacity for motorcycle tires will be expanded to XX,XXX units per day from X,XXX units at present. In the second phase its production capacity for car tires will be increased to XX,XXX units per day and motorcycle tires to XX,XXX per day by the end of 2011.
MAS will need rubber basic material totaling XX,XXX tons in 2011--up from XX,XXX tons in 2010. In 2011, in order to guarantee supply of the rubber basic material, MASA plans to establish a subsidiary to operate rubber plantations integrated with crumb rubber plants. The crumb rubber factories will have a production capacity of X,XXX tons. The project will cost around US$ XXX million. According to plan the factories will be built in Central Tapanuli, North Sumatra, Kalimantan and Sulawesi.