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09/07/2018
Indonesia first stage of the autopromotec 2019 roadshow

International


The global promotional tour of the Bologna aftermarket fair picks up from where it left off in Jakarta by participating in the local INAPA trade show

 

Emanuele Vicentini

After the successful 2017 edition of Autopromotec, with record breaking figures in the number of foreign professional visitors – up by 14% with official delegations from over 30 countries - the new promotional tour for next year’s event got under way recently in Jakarta.

October 2017 was the date of the first promotional tour that took the event’s organizers to Colombia, Chile and Argentina, and was then followed by Indonesia, the first area chosen for this year’s Autopromotec promotional road-show scheduled to reach many other countries in the coming months.

In Jakarta, thanks to the full support of the local ICE office, meetings were held with some of the country’s main stakeholders as well as a number of institutional players during this year’s edition of INAPA, the main annual automotive aftermarket event in the country.

But why Indonesia? This is an area where preliminary operations have already been carried out in previous years, first by performing an in-depth study that revealed interesting facts about the country besides its great market potential, which was then followed by a large delegation of Indonesian operators attending the 2017 edition of Autopromotec; this provided additional feedback.

First of all, here are some of the data collected: Indonesia registers, on average, about one million new vehicles per annum, evaluating the period between 2010-2016 (over 88% of which are Japanese brands), but, above all, annual sales of “two-wheelers”(mopeds, scooters, motorcycles) have reached well beyond the 7 million mark over the last 5 years.

All this, together with the almost total absence of a railway and other alternative road infrastructures, contributes to generating traffic jams and bottlenecks worthy of Dante’s hell throughout the streets of the capital Jakarta as well as other main cities around the country (source: GIAMM Indonesian Auto parts Industry Association).

The local economy recorded a fairly constant growth in recent years, around 5%, although this figure is considered by some a little disappointing, especially as the country has recently come up with a rather ambitious plan to upgrade all the main infrastructurs (roads, bridges, railway lines, subway lines, airports) which might be completed through a great prevalence of Chinese backed project-financing if not enough capital is generated within the country.

The meeting with Hadi Surjadipradja, GIAMM’s general director (GIAMM stands for Gabungan Industri Alat-alat Mobil and Motor, or Indonesian Automotive Parts & Components Industries Association) as well as with the organizers of INAPA (Baki Lee director of GEM Indonesia) and IIMS (Indonesian International Motor Show) made it possible to understand how the country might prove rather appealing to the automotive sector, despite having to contend with neighbouring Thailand’s great research and development centres and Vietnam’s lower cost of labour. High taxations on imported goods keep local production of two and four wheel vehicles  competitive and even advantageous.

Especially noteworthy was the meeting with GIAMM’s directors which helped to focus on key features of the local market. Out of the over 240 members of the association, a large majority, 122, are joint ventures set up by Japanese companies, which employ a total of almost 230 thousand workers. Most of the companies are located in the West Java area (147), followed by Jakarta (43), Barten (31) and East Java (16).

Car sales in 2017 were close to 1,080,000 units, while the rather heterogeneous two-wheeler market recorded sales for 5,900,000 units: this, for both segments, represents a slight decrease in sales, which has consistently taken place since 2013. Over 75% of the sales belong to Honda, followed by Toyota; basically these two brands make up the entire market.

The number of vehicles that swarm through the limited Indonesian road infrastructure paint an impressive picture: at the end of 2016, according to official sources, over 18.5 million registered cars were in circulation, a far cry from the staggering 98 million scooters, mopeds, motorcycles etc.

Additional significant data from the 2016 market analysis commissioned by Autopromotec and AICA showed a significant increase in the number of service and assistance networks, which followed the recent growth of the country’s middle class, a growth that is expected to continue for some time. Most are medium and small car repair shops, with an extremely irregular market. Approximately 40% of the entire National fleet is located in the Jakarta metropolitan area, which means that a similar percentage of workshops are found in the area too, with an early average growth rate of about 9%, going from just over 42 thousand in 2012 to over 60 thousand in 2016. The business resulting from all these activities generated, in 2016, a 7.1 billion dollar turnover, including specialized car and bike workshops.

The following days at the fair were the perfect opportunity to meet a number of national and International stakeholders coming from China, Malaysia, Singapore and the Philippines, while the European presence was quite negligible. Despite the heavy import duties, local dealers of Italian equipment confirmed how sales figures have been rather comforting in the last two years, while representatives from the local specialized press displayed a sincere interest in anything made in Italy , whether a technical device, a new motorbike or car, or even trade shows such as the case of Autopromotec, which, for the first time, displayed its new institutional image (see photo).

Some of the main interlocutors and stakeholders met, including press representatives, had already travelled to Italy to visit, if not Autopromotec, perhaps EICMA, specialized motorcycle trade show, or EIMA, the international exhibition of farming equipment. This leads to a couple of considerations: on the one hand, there is a decidedly high perceived value of Italian-made products, on the other, the sector still lacks a specialized approach (often auto parts importers are also involved in importing farming parts and components and, at times, goods completely foreign to the sector such as food or clothing).

Indonesia is a rather complicated country and the same can be said for the local automotive market. However great opportunities are there to be taken, which will, in any case, require further studies, new contacts, and promotional activities around the Autopromotec brand. The goal is to organize, within a year, of a group of companies interested in business networking, market opportunities and searching local partners.

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