Indonesia Commercial Vehicle Tire Market –Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Vehicle Type (Light Commercial Vehicle, Medium Commercial Vehicle, Heavy Commercial Vehicle), By Application (Construction, Mining, Agriculture, Transport, and Other Applications), By Demand Category (OEM, Replacement), By Region, By Competition, 2019-2029F
Published Date: March - 2025 | Publisher: MIR | No of Pages: 320 | Industry: Automotive | Format: Report available in PDF / Excel Format
View Details Buy Now 2890 Download Sample Ask for Discount Request Customization| Forecast Period | 2025-2029 |
| Market Size (2023) | USD 4.20 Billion |
| CAGR (2024-2029) | 3.86% |
| Fastest Growing Segment | Light Commercial Vehicle |
| Largest Market | Java |
| Market Size (2029) | USD 5.27 Billion |
Market Overview
The Indonesia Commercial Vehicle Tire market was worth USD 4.20 Billion in 2023 and is anticipated to grow to USD 5.27 Billion in 2029 at a CAGR of 3.86% over the forecast period.
The Indonesia commercial vehicle tire industry is witnessing tremendous growth because of the growing transportation and logistics industries. As Indonesia's economy continues to grow, the need for freight and passenger transport services is on the rise. Increased demand for infrastructure like road building and urbanization is also driving demand for additional commercial vehicles. When more and more vehicles enter circulation, replacement tire demand and demand for new tires also increase, making the tire market vital in sustaining the expanded commercial fleet. Another primary driver of growth is the emergence of e-commerce and a higher level of delivery services as companies seek to add fleets to their supply chains efficiently.
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Innovation in the tire industry also comes in the form of trends such as adopting high-end technology in the manufacture of tires. The growth in smart tires that are able to monitor pressure, temperature, and tread wear is revolutionizing tire usage and maintenance. This technology helps reduce maintenance expenses and improve the performance of vehicles, hence why they are a popular choice among fleet operators. Additionally, sustainability is an increasingly important concern, with more emphasis being placed on sustainable tires that are manufactured from environmentally friendly materials and help to promote lower fuel consumption. These technology and environmental trends are creating new possibilities for tire makers to serve both the owners of commercial vehicles and regulators concerned with green efforts.
There are still challenges that may slow the growth of the market. Raw material price volatility, like rubber and oil, and raw materials' fluctuating costs, which lead to increasing tire manufacturing costs, strain manufacturers. In addition, the tire market has been highly competitive, with price wars and decreased profit margins often following. Increasing fuel prices and volatile demand for commercial vehicles in some sectors also lend to market uncertainty. Even so, Indonesia's commercial vehicle tire market is set to grow steadily, underpinned by ongoing growth of transportation needs, technological progress, and sustainability measures. These factors are expected to fuel the market’s development in the coming years.
Market Drivers
Growth in E-commerce and Logistics
The rapid expansion of e-commerce in Indonesia has created a surge in demand for delivery and logistics services. Commercial vehicles, especially light commercial vehicles (LCVs), are crucial for last-mile delivery, which is growing rapidly as businesses strive to meet the increasing consumer demand for fast shipping. The expansion of warehouses and distribution centers across the country has led to a greater need for commercial vehicles to facilitate efficient delivery services, thereby driving the tire market. For instance, In January 2024, the International Trade Association reported that Indonesia led the ASEAN countries in e-commerce business revenue, generating USD 51.9 billion, equivalent to approximately IDR 778.8 trillion, in 2022. The total e-commerce revenue across ASEAN for the same year amounted to USD 99.5 billion, indicating that Indonesia's e-commerce sector accounted for 52% of the overall revenue.
Infrastructure Development
Indonesia's government continues to invest in infrastructure projects, including road networks, bridges, and ports. The development of these projects supports the growth of the commercial vehicle sector, as improved transportation infrastructure encourages the movement of goods and services across the country. This growth in infrastructure directly increases the demand for commercial vehicle tires to support the expanding vehicle fleet.
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Urbanization
Urbanization is accelerating in Indonesia, with more people moving to cities for better opportunities and lifestyles. As urban centers grow, the demand for commercial vehicles for public transportation, cargo, and logistics services rises. This creates a steady demand for replacement tires and new tires for commercial vehicles, thereby driving the tire market's growth.
Key Market Challenges
Volatility of Raw Material Prices
The Indonesian commercial vehicle tire industry is confronted with one of the greatest challenges in relation to the volatility of raw material prices. Primary materials such as rubber and oil tend to undergo price fluctuations, which influence tire manufacturing costs for producers. The volatility may lead to increased tire prices, impacting businesses and customers alike, and also generating uncertainties in the market.
Tire Counterfeiting
The availability of fake tires in the market is a serious challenge. Fake tires, which are usually of poor quality, compromise the safety and performance of commercial vehicles and, thus, they may cause accidents and maintenance problems. The rise of fake products makes it harder to understand market dynamics since the consumers buy such products without their knowledge, and this affects total demand for quality tires.
Indonesia's tire industry is heavily reliant on imported raw materials and finished goods. Supply chains are vulnerable to being disrupted by changes in global trade policies, shipping rates, and currency exchange rates, which cause delays and increased costs for local manufacturers and businesses. Being reliant on imports exposes the market to external shocks, influencing its overall stability and growth.
Key Market Trends
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Increased Demand for Affordable Tire Solutions
As Indonesia’s economy continues to grow, small and medium-sized enterprises (SMEs) are increasing their presence in various industries. These businesses often rely on commercial vehicles for transportation and logistics. In response to this growing demand, there is a noticeable shift toward affordable and cost-effective tire solutions in the market. Manufacturers are producing tires that provide a balance between price, quality, and performance to cater to businesses with tighter budgets, creating a strong market for budget-friendly tires.
Increased Focus on Local Manufacturing
With the growing demand for commercial vehicle tires in Indonesia, there has been a marked increase in the focus on local tire manufacturing. Local manufacturers are ramping up production capacities to cater to the expanding market, reducing reliance on imports. This shift is encouraged by government policies aimed at boosting domestic industries and promoting job creation. Local tire manufacturers are investing in advanced technologies and production capabilities, ensuring they can meet the demand for quality tires at competitive prices while also minimizing supply chain disruptions. For instance, in March 2024, Sailun Group, a leading tire manufacturer based in China, initiated a major investment project, allocating USD 250 million (EUR 230 million) for the construction of a new tire manufacturing facility in Indonesia. This strategic initiative is a crucial component of Sailun's extensive overseas expansion plan. The new plant is expected to have a significant production capacity, capable of producing 3.6 million radial tires for passenger vehicles each year, in addition to 37 kilotonnes of off-highway tire products.
Shift Toward Radial Tires for Commercial Vehicles
Radial tires, known for their durability, fuel efficiency, and improved performance, are becoming more popular in Indonesia's commercial vehicle tire market. This trend is driven by the increasing need for tires that can handle long-distance travel and heavy loads, especially as industries like logistics, agriculture, and construction expand. Radial tires help reduce fuel consumption and maintenance costs, making them a preferred choice for fleet operators in Indonesia who seek long-term savings.
Segmental Insights
Vehicle Type
The Indonesia commercial vehicle tire industry is segmented by vehicle type into Light Commercial Vehicles (LCVs), Medium Commercial Vehicles (MCVs), and Heavy Commercial Vehicles (HCVs). Each of these segments possesses its own set of characteristics and needs that generate demand for particular types of tires appropriate to their specific applications.
Light Commercial Vehicles (LCVs), typically utilized for small delivery, retail, and service vehicles, tend to demand tires that must balance fuel efficiency, durability, and affordability. They travel short distances and are usually on urban roads and in heavy traffic. LCV tires must therefore be capable of high maneuverability, rapid acceleration, and reasonable performance on Bitumen roads. With the increase in e-commerce and delivery business in Indonesia, the demand for LCV tires is gradually rising due to increasing demand for cost-effective last-mile delivery solutions.
Medium Commercial Vehicles (MCVs) are used in a wide spectrum of industries such as logistics, construction, and public transport. MCVs usually transport goods or people over medium to long distances and need tires that provide a mix of load-carrying capacity, durability, and performance on both paved and unpaved surfaces. MCVs are likely to face varied road conditions, such as rural roads or construction areas, and tires for these vehicles must endure the wear and tear of such terrains. Tires in this category are generally suited for better traction, improved heat resistance, and extended longevity to make the vehicles run smoothly and safely under different conditions.
Heavy Commercial Vehicles (HCVs) are employed to carry bulk commodities and heavy equipment over long distances. These trucks need the most load-bearing tires, they must be super durable, and they need to be able to withstand severe driving conditions. HCVs like trucks and trailers spend most of their time driving on highways, but they sometimes drive on tough roads and hostile environments, particularly in rural locations. HCV tires must be engineered with heavy-duty sidewalls, better tread patterns, and materials that enable them to handle the weight and constant long-distance driving. Such tires are also required to offer puncture damage resistance, abrasion, and high heat resistance produced during use.
Every vehicle type in the commercial vehicle tire market in Indonesia has its own set of demands, compelling tire manufacturers to modify their products to suit the varied needs of the transport sector. With the demand for commercial vehicles increasing in Indonesia, the market for tires designed for these various vehicle types is likely to change, with manufacturers coming up with new ideas to improve performance, safety, and affordability.
Region Insights
Java is the leading region in Indonesia's commercial vehicle tire market in 2023. Java is still the economic and industrial center of Indonesia, which commands a huge proportion of commercial vehicle use and tire demand. The island contains the largest cities, such as Jakarta, Surabaya, and Bandung, that are responsible for generating a high level of Indonesia's logistics, transport, and manufacturing activities. The density of the population, with a matching focus on enterprises and infrastructure, contributes to increased demand for commercial trucks in every line of business, ranging from retail distribution to carriage of goods, all which heavily depend on tires.
The comprehensive network of roads covering Java that interconnects prime industrial pockets and city hubs has ample capacity to cater to intense movement by commercial trucks. This infrastructure of roads makes it easy for the transportation of goods, leading to the high demand for tires in commercial vehicles. Consequently, Java has a greater rate of tire replacement, maintenance, and new tire purchase. The area also has considerable logistics activity with the presence of big distribution centers and e-commerce firms. These conditions, along with the extensive application of light, medium, and heavy commercial vehicles in Java, make the market for tires strong.
Increased industrial and infrastructure growth in Java also propels the demand for commercial vehicle tires. Construction, mining, and agricultural industries rely on a fleet of commercial vehicles, each of which needs quality tires for various operational purposes. Java is also supported by a well-established and effective supply chain network that facilitates convenient access to tire products, both original equipment and replacement. With growing commercial activities, the demand for tires that can endure high usage in urban and semi-urban locations, as well as on rural roads connecting the island's different regions, also grows.
The high density of businesses, commercial vehicle fleets, and consumers in Java causes higher demand for commercial vehicle tires than in other parts of Indonesia. The ongoing economic development and urbanization in Java guarantee that this trend will continue, making it the leading region for the commercial vehicle tire market in Indonesia in 2023.
Recent Developments
- In 2022, Michelin became the exclusive owner of Royal Lestari Utama (RLU), a partnership with Barito Pacific Group. The tire manufacturer, which previously owned 49% of the shares, has now acquired an additional 51%. Initiated in 2015, the RLU project is designed to establish optimal conditions for the cultivation of sustainable natural rubber in Indonesia, covering an extensive area of 70,000 hectares in Sumatra's Jambi province and 18,000 hectares in East Kalimantan province on Borneo. These regions had previously experienced significant damage and deforestation prior to the involvement of Michelin and its Indonesian partner.
- In 2023, Aeolus launched two subsidiaries in Chile and Indonesia to manage tyre import, export, and wholesale operations. According to Tyrepress China, the tyre manufacturer aims to enhance strategic planning, foster international collaborations, expand its business scope, accelerate internationalization, and improve global competitiveness. The board approved the creation of these subsidiaries, which include "OTR" in their names, indicating a focus on expanding the local OTR market.
- In 2024, two prominent institutional investors have allocated funds to Indonesia's infrastructure development, reinforcing their dedication to long-term investments in real assets. The investors have specifically targeted the Trans Java Toll Road segments of Kanci-Pejagan and Pejagan-Pemalang. These segments serve as the foundational assets for the platform, which aims to secure investment opportunities totaling up to USD 2.75 billion within Indonesia's toll road infrastructure, as stated by the group.
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
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