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Build · Compete · Grow
1
INDONESIA’S GROWING
AUTOMOTIVE
AFTERMARKET
LANDSCAPE
August 2016
Build · Compete · Grow2 consulting.bc@ipsos.com
Executive Summary
• Significant opportunities exist for Indonesia’s growing aftermarket landscape, with over 11 million PVs
(~77% of total PV population) to be out of warranty by 2020, with an out of warranty population CAGR of
9.7% from 2015-2020.
• Indonesia’s developing used car market is gradually becoming more structured due to the greater
availability of flexible financing terms, standardized and authorized dealership channels and better
transparency of information.
• Parts players will continue to rely on parts retail shops to ensure wide distribution coverage to end
channels and users.
• Parts players face key challenges in identifying and controlling qualified distributors whilst distributors
face intensifying competition in the aftermarket landscape.
• Though uncertified independent workshops continue to dominate the market due to their cheaper
service fees and generalized service offerings, branded workshops are gaining popularity due to their
higher service and product quality. The rise of branded workshops enable parts players to sell directly to
branded end channels rather than going through the fragmented traditional market channel structure.
• Widespread availability of reliable and trusted genuine parts in the independent aftermarket channels
increases the challenge for non-genuine parts players.
• Consumers’ general lack of awareness in vehicle parts results in them placing great reliance on
mechanics and OEM recommendations to ensure convenient and hassle-free maintenance.
Build · Compete · Grow3 consulting.bc@ipsos.com
Implications for foreign and new market players to capture Indonesia’s
aftermarket opportunity
1 2 3Distribution Structure Competition in IAM Consumer Purchasing
Challenges faced by parts players:
• Identifying qualified distributors
to partner with
• Tracking and controlling
distributors’ purchasing and
selling channels
Branded workshops are gaining
popularity due to higher quality
servicing and parts offered.
Gradually reducing high reliance on
fragmented retail shops
Foreign and new market players
should stabilize and identify
relevant partners to become
distributors through standardized
screening procedures
Grow modern channels to
generate opportunities for direct
selling and enforcing greater
control on product sales channels
Availability of genuine parts in
IAM intensifies the aftermarket
competitive landscape for non-
genuine parts.
Consumer preference is shifting
towards OEM genuine products:
• Perceived to be higher quality
and more reliable products
• End channels enjoy higher
margins and turnover
Actions for non-genuine parts
players to incentivize consumers
and differentiate themselves
from genuine parts:
─ Localize and re-assess
product offerings
─ Redefine price positioning
─ Enhance branding and
communications with end
channels and users
Consumers are highly influenced by
mechanics at workshops.
• Consumers show minimal
willingness to learn or try new
brands
• Mechanics prioritize genuine
products for parts critical to
vehicle engine and usage
• Consumers remain loyal to
trusted mechanics and brands
Foreign and new market
players should target
promotional strategies toward
mechanics to ensure that they
recommend specific parts
brands
Educate and increase
consumers’ awareness through
attractive promotional
campaigns
SituationImplications
Build · Compete · Grow
1. INDONESIA AUTOMOTIVE AFTERMARKET INDUSTRY LANDSCAPE
2. INDONESIA AUTOMOTIVE AFTERMARKET DISTRIBUTION CHANNEL STRUCTURE
3. END CHANNEL SERVICE AND PRODUCT OFFERING
4. END USER PURCHASING BEHAVIOUR
5. ABOUT IPSOS BUSINESS CONSULTING
Build · Compete · Grow5 consulting.bc@ipsos.com
By 2020 over 11 million passenger vehicles in Indonesia will be out of warranty,
providing a significant opportunity in the automotive aftermarket
PV POPULATION BREAKDOWN
3.2
0.3 0.4
0.5 0.4
0.6
0.8
0.9 1.1
1.1
Before
2006
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2020f
• Significant growth is expected for out-of-warranty vehicles in Indonesia. Some background:
– With majority of the population residing outside 1st tier cities, consumers have greater preference for second-hand
vehicles due to their lower prices and also the limited number of PV dealerships available in their regions
– Though Jakarta’s governor plans to limit vehicle age to 10 years in the city to reduce traffic congestion, no regulations
have been implemented thus far regarding vehicle age limitations.
PV Population Breakdown by Car Age*
Car Age
0-3
3-8
>8
Unit: Million
123456789≥10
Out of warranty by 2015
CAGR
15-20
2.3%
8.9%
10.4%
Age in Years
CAGR
7.7%
Car Age > 8 years Car Age 3 – 8 years Car Age 0 – 3 years
10.2
32%
38%
30%
23%
43%
14.7
34%
* PV population and sales include light-duty/pick-up trucks
Build · Compete · Grow6 consulting.bc@ipsos.com
Even with a low PV ownership ratio, Indonesia’s encouraging annual sales have
been driven by its favorable demographic trends, particularly in 1st tier cities
PV OWNERSHIP RATIO (PER 1,000) BY REGION
PV Ownership Ratio (per 1,000)
Medan
91
Jakarta
142
Bandung
81 Surabaya
69
Source: BPS 2014
1st Tier Cities Jakarta Surabaya Bandung Medan
Population 10,075,000 2,856,000 2,470,000 2,191,000
2014 GDP per Capita (USD) 11,476.9 9,029.6 4,725.8 4,557
2014 GDP Contribution to National (%) 16.04% 3.56% 1.62% 1.37%
2014 Spending per Capita (USD) 140.2 117.2 105.8 80.8
• Indonesia’s PV ownership ratio in 2015
was just 40 PV per 1,000 people.
• Areas with higher PV ratios (e.g. Medan)
reflect a local tendency to purchase cars
for image and social status, while cities
with lower PV ratios (e.g. Surabaya) tend
to be in close proximity to satellite cities
from which PV owners often commute on
a daily basis
Build · Compete · Grow7 consulting.bc@ipsos.com
The new arrival of LCGC’s in the aftermarket is expected to disrupt the dominance
of MPV’s in the long run, and extend the success of Japanese OEM’s in Indonesia
OUT OF WARRANTY PASSENGER VEHICLE POPULATION
Others*
MPV
SUV
2015 Out-of-warranty vehicles by segment*
*Others includes citicar and hatchback
4%
48%
20%
11%
19%
• The differences in proportion between out-of-warranty models could affect differences in service and purchasing channels
being used, consumer preferences, and ultimately the types of parts and price points to sell in the market.
LDT
Sedan
* PV population and sales include light-duty/pick-up trucks
2015 Out-of-warranty vehicles by brand*
7.14 million
units
Others
Mitsubishi
Suzuki
Nissan
Honda
Daihatsu
Toyota 46.8%
16.9%
8.9%
8.1%
3.4%
7.3%
8.5%
*Others includes Hyundai, KIA, Chevrolet and Volkswagen
Build · Compete · Grow8 consulting.bc@ipsos.com
Improvements in Indonesia’s underdeveloped used car market can be seen
through greater standardization of dealer channels and information transparency
Indonesia Used Car Market Overview
Policies / Regulations
Selling Practice
Consumer Purchasing Practice
Indonesia Used Car Market Development
• Indonesia has no formal national association in place
• Dealer clusters create own community-based associations
to ensure comparable prices within the cluster, and
gatherings to enhance support for the cluster
• Dealership industry is fragmented and unstructured
• Independent dealers continue to dominate the market
due to cheaper prices by taking smaller margins than
chained/branded dealers, and the ability to negotiate prices
• Greater focus on fast-moving vehicles such as MPV & SUV
• Prefer trusted independent dealers due to cheaper prices
• Leverage online car sales channels for price comparisons
• Whilst around 90% of new cars are purchased on credit,
~40% of used car purchases are made by cash, as this
enables consumers to enjoy 20-30% lower prices
INDONESIA USED CAR MARKET OVERVIEW
• Governing body regulating used car market:
─ Indonesia should adopt Thailand’s used car
association model to ensure data (price and
sales volume), selling terms and market
information are centralized
─ Adopting Thailand’s used car market
association system would allow for greater
transparency and customer assurance
• OEM certified used car dealer channels are
emerging in Indonesia where consumers benefit
from its greater quality assurance and better sales
terms reliability
• Used car financing systems in Indonesia should
adopt more favorable contract terms (e.g. the
provision of warranty period for certain part
changes) to drive market growth
• Growth of online selling channels (e.g. Carmudi)
will enhance market price transparency as
consumers can more easily compare prices from
various channels
Imported Used Cars
• Regulations from the Ministry of Trade make it almost
impossible to import used cars into Indonesia. Typically
only government bodies and diplomats are permitted.
• Even if regulations are complied with, customs can charge
up to 300% duty on vehicle value
Build · Compete · Grow9 consulting.bc@ipsos.com
The fragmented market dominated by independent and individual dealers
provides branded and OEM certified dealers ample room to grow
Indonesia
Used Car
Dealership
Types
Individual Sellers
Independent
Dealers
Branded / Chained Dealers
OEM Certified Used Car Dealers
Clustered
Standalone
• Sellers with no legal business entities and who typically sell
family/friends’ personal cars directly to end users
• Would engage with independent dealers to help sell cars and
enable selling with credit financing
• Mainly located in 1st tier cities
• Create community group within the cluster to help regulate
sales and pricing structure
• Mainly located in outskirt/rural regions where individual
sellers would partner with them to help sell vehicles
• Chained and standardized dealerships where price setting
methods, marketing tools and sales terms are regulated
• E.g. Mobil 88, a subsidiary of Astra, is the largest used car
branded dealer chain with 22 dealers across Indonesia and its
own online marketplace platform
• Emerging dealership type in Indonesia
• OEM guarantee for vehicle reconditioning and warranty period
• E.g. BMW Indonesia currently has 2 certified used car dealers
• Assured resale value: e.g. Hyundai’s buy-back program
Auction House
• Main supplier of cars to independent dealers
• 95% of sales go to independent dealers and 5% to end users
• Cars are supplied to them mainly by leasing companies
INDONESIA USED CAR DEALERSHIP STRUCTURE
Build · Compete · Grow10 consulting.bc@ipsos.com
The underdeveloped market provides favorable opportunities to OEM certified
and branded dealers offering price assurance and quality vehicles
USED CAR MARKET PURCHASING CHANNELS
18%
9% 2%
48%
45%
36%
33%
46%
62%
Jakarta Other 1st Tier
Cities*
2nd Tier
Cities**
Used Car
Sales
Comparison Between New Car vs. Used Car Sales - 2016
• Growing trend for OEM certified dealers in Indonesia:
─ Only several car brands have opened their own used car dealers (e.g. BMW, Mercedes Benz, Hyundai and Toyota)
─ Attractive for OEM to establish own network: greater control over resale value, reconditioning for engine quality
─ Buyers preference towards OEM certified dealers due to greater vehicle quality, price assurance despite typically
higher prices, and warranty provided with purchase
• Independent dealers continue to drive the used car market, particularly outside Jakarta, due to their widespread presence
throughout Indonesia, flexible negotiation for prices, lower margins, quick turnover and wider variety of car age available
New Car
Sales
Used Car Dealer Purchasing Channels - 2016
39%
31%
22%
61%
69%
78%
Jakarta Other 1st Tier
Cities*
2nd Tier
Cities**
Independent
Dealers***
Branded
Dealers
OEM Certified
Dealers
**2nd Tier Cities surveyed include: Pekanbaru, Makassar, Palembang, Yogyakarta, Semarang and Balikpapan
*Other 1st Tier Cities include: Bandung, Surabaya and Medan
***Independent dealers include individuals, cluster, and standalone dealers
Build · Compete · Grow11 consulting.bc@ipsos.com
Used Car Dealership
Financing
company
End-users
~ 60% ~ 40%
Less-established used car dealers, primarily located outside 1st tier cities, have
higher proportion of cash sales as PVs sold are typically older (>10 years old)
USED CAR FINANCING OVERVIEW
• Common contractual terms:
 Loan value up to 70-75% of the used car price
 Up to five years payment period
 Approval in 3 – 7 days
 Interest rate of 8.5% to 9.5% when using bank
financing. Interest rate of 11% to 13% when using
private financing companies
 Indonesia’s financing companies do not offer
warranty on parts, and partnered insurance
companies typically only insure two service types:
body repair and stolen cars
• Independent used car dealers prevent exposure from
buyers’ financial risks through partnering with multi
and auto-financing companies.
• Loans from financing companies are not granted for
cars over 10 years old due to their much shorter
lifespan, higher risk of damage and depreciated value
• Larger proportion of cash payment compared to new
car purchases as price can be ~20-30% lower
• Down payment required for used cars:
• Financing from banks (regulated by Bank of
Indonesia): 30%
• Financing from private financing companies: flexible
Used Car Payment Practice Overview of Used Car Financing Companies
Cash
USED CAR FINANCING OVERVIEW
Build · Compete · Grow
1. INDONESIA AUTOMOTIVE AFTERMARKET INDUSTRY LANDSCAPE
2. INDONESIA AUTOMOTIVE AFTERMARKET DISTRIBUTION CHANNEL STRUCTURE
3. END CHANNEL SERVICE AND PRODUCT OFFERING
4. END USER PURCHASING BEHAVIOUR
5. ABOUT IPSOS BUSINESS CONSULTING
Build · Compete · Grow13 consulting.bc@ipsos.com
OES Channel Independent Aftermarket Channel Structure
*Non-OE distributor: OE parts manufacturers’ after-market product and brand
Parts retail shops and wholesalers are the main channel distributing both genuine
and non-genuine parts to end channels
CHANNEL STRUCTURE OVERVIEW
OES Parts
Manufacturers
Vehicle OEM
Authorized
Dealers (2S/3S)
𝟏 𝒔𝒕
Tier
Distributor
Local Non-OE Parts Manufacturers
Direct
Importer
Parts Retail Shop / Wholesaler
End-users
Uncertified
Independent
Workshops
Branded
Workshops
Primary Channel
Secondary Channel
Authorized Parts Supplier
Foreign Non-OE Parts
Manufacturers
Non-OE
distributor*
OES After-market
Manufacturers
End Channel Workshops
OE Manufacturers
Certified
Independent
Workshops
Build · Compete · Grow14 consulting.bc@ipsos.com
By relying on its dealership networks and Astra Otoparts subsidiary, Astra
continues to dominate Indonesia’s automotive landscape
ASTRA INTERNATIONAL TBK CHANNEL STRUCTURE OVERVIEW
Astra International Channel Structure Mapping Astra International Tbk:
• Astra’s car dealerships account for
over 50% of new PV sales in Indonesia
Genuine Parts:
• Since 2016, all genuine parts
distributed by authorized suppliers
must go through authorized dealers
prior to entering independent
aftermarket channels
• For Toyota, there are currently 37
authorized main dealers in Indonesia
Non-Genuine Parts produced by OE
manufacturers have 2 types of
distribution networks:
• Through Astra Otoparts or
independent non-OE distributors
• Astra Otoparts has developed one of
the leading franchise branded
workshops in Indonesia – Shop and
Drive, with over 360 stores
nationwide.
OES Parts
Manufacturers
Vehicle OEM
Authorized
Dealers (2S/3S)
Parts Retail Shop / Wholesaler
End-users
Independent
Workshops
Branded
Workshops
Primary Channel
Secondary Channel
Authorized Parts Supplier
(e.g. Toyota Astra
Motors)
OES After-market
Manufacturers
End Channel workshops
OE Manufacturers
Non-OE
distributor*
Astra Otoparts
*Non-OE distributor: OE parts manufacturers’ after-market product and brand
Build · Compete · Grow15 consulting.bc@ipsos.com
Despite policies and procedures enforced by brand principles, selling and
purchasing terms for many distributors remain fragmented and unenforced
Least Prominent Most Prominent
Main Channel
Products
Offered
Policies and
Procedures
Multiple Parts for One Car
Brand
One Part Type for One
Brand
Multiple Parts for One Brand
Authorized Parts Supplier Importers Non-OE Distributors 1st Tier Distributors
• Genuine parts supplied
directly by vehicle OEMs
• Packaging is regulated by
OEMs (tracking code)
• Non-genuine parts and
brands that have limited
presence
• Directly imported parts
• Non-genuine parts
from OES after-
market
manufacturers
• Non-genuine parts
from non-OE
manufacturers
• Greater specialization
• Authorized dealers
• Parts retail shops
• Parts retail shops
• Known end channels
• 1st tier distributors
• Parts retail shops
• Parts retail shops
• Larger end channels
• Nationwide through main
dealers in each region
• Within city/region
• Cross-city by request
• Within city/region
• Cross-city by
another distributor
• Typically have
representative offices
nationwide
• Appointed by vehicle
OEM to be its authorized
distributors
• Heavily regulated in
terms of sales channel
coverage and margins
• Have pre-existing
partnership with foreign
parts players
• Minimal procedures
followed to supply parts
• Regulated by brand principles, mainly to
prevent them from carrying a different brand
of the same part type
• Typically a licensed business entity with a
warehouse for inventory stock
Channel
Coverage
Geographical
Coverage
KEY CHANNEL ACTORS
Build · Compete · Grow16 consulting.bc@ipsos.com
Establishing direct selling opportunities through partnering with the growing
branded workshop channels can assist players’ efforts to control distributors
Distribution Challenges for Parts Players Operational Challenges for Authorized Distributors
Identifying Relevant / Reliable Partners
Controlling Selling Terms and Procedures
Recommendations to Overcome Distribution Challenges
Selling Terms and Procedures
Intensifying Competitive Landscape
• Foreign non-genuine parts players face a shortage of
qualified and capable distributors to partner with
• Screening procedures are implemented to ensure
distributors have the capability and resources to
optimize distribution in a given region
• Contracts force distributors to honor proper channels
and margins, although parts are hard to track beyond
this stage.
• Authorized distributors sometimes seek alternative,
cheaper purchasing channels (e.g. direct importers)
• High purchase price and selling price list provided by
parts players limit flexibility in setting price markups to
remain competitive in the market
• Larger distributors who can sell at lower prices (e.g. bulk
discounts) could potentially cannibalize smaller players
• Parts players, as part of their expansion plans, continue
to add distributors with different contractual terms and
procedures for each partnership.
─ The resulting difference in discounts and incentives
becomes unfavorable for distributors in the same
coverage area
• Direct selling to end channels through branded workshops. This tactic allows for greater control of product supply, selling
terms and higher margins through cutting out the intermediary (e.g. Bosch through their Bosch Car Service)
• Standardizing selling terms, price and geographical coverage to ease intense competition
• Offering incentives, training and development to motivate qualified and capable distributors
DISTRIBUTION CHALLANGES
Build · Compete · Grow17 consulting.bc@ipsos.com
Retailers in 1st tier cities are typically brand-specialized shops, while those in 2nd
tier cities sell a variety of products and brands as mass retailers
Parts Retail Shops
• No services offered. Most outlets act as passive wholesalers that facilitate gross selling
• Largest channel for parts purchasing. Main supplier for end users, independent and branded
workshops. Workshops tend to not stock parts and purchase on ad hoc basis for retailers
Brand-Specialized Retailer Mass Retailer
• Sell spare parts and a variety of brands for one to
two specific car brands (e.g. Honda, Toyota parts
retailer)
• Typically sell both the genuine and non-genuine
brands of the products
• Mostly located in 1st tier cities
• Offer wide range of products and multiple
brands at varying levels of quality and price
• Typically sell non-genuine brands, with
some proportion of genuine brands
• Mostly located in 2nd tier cities
• Typically purchase from 1st tier distributor or
direct importer
• Sell directly to end users or end channels; also
sell to mass retailers in 2nd tier cities
• Typically purchase from 1st tier distributor,
direct importer, or brand-specialized retailer
• Sell directly to end users or end channels in
remote regions in 2nd tier cities
Key
Characteristics
Purchasing &
Selling
Channel
Description
Major Models
RETAILER OVERVIEW
Build · Compete · Grow18 consulting.bc@ipsos.com
Trend towards branded workshops will result in specialization of service and
product offerings, as well as greater control in managing quality and authenticity
Parts
available
Future
Trend
Branded WorkshopsAuthorized Dealers
Uncertified
Independent WS
Certified Body
Repair Shops
Services
Offered
Major authorized OES
channel for new cars
Chained workshops –
franchised and
standardized
Partnered and verified by
insurance companies
Traditional unchained
channel for general
manual services and
repairs
Provides all services and
maintenance needed for
specific OEM brand
Greater specialization
(e.g. AC repair, tire
change shops, battery
change)
Specialized in body repair.
Only ~5-10% can provide
general services
Generalists
• Less advanced in terms
of technology and
equipment
Complete stock for OEM
genuine parts
Higher repair capability in
terms of mechanics and
equipment
Larger stock for their
specialized parts type
Only stock parts for body
repair, and very limited
stock for other parts type
Limited inventory stock
• Carry fast-moving
replacement parts
• Purchase on ad-hoc
basis from retailers
Slower growth than
branded workshops due
to long waiting time and
more expensive fees
Fast growth due to high
service quality, capable
mechanics, better
equipment and
trustworthiness
Growth is limited - not
expected to branch out to
provide other services
Higher growth in
outskirts/rural regions
Description
END-USER CHANNEL TRENDS
Build · Compete · Grow19 consulting.bc@ipsos.com
~250-300
~550-600
~1,200-
1,500
~45-65
~60-70
~330-360
~30-40
~50-60
~250-300
~50-60
~50-70
~200-250
0 500 1000 1500
Bandung Medan Surabaya Jakarta
Estimated Number of End Channel Outlets in 2015
• Traditional end channel outlets remain the largest
contributor for the after-market in Indonesia
– Their success is due to cheaper service fees,
quicker service times and widespread outlets
throughout each city
• Independent workshops are gradually being
targeted by lubricant, tire and parts brands to
become their sponsored workshops
– Example: Bridgestone, through its workshop
brand ‘Toko Model’, rebrands independent
workshops in turn for equipment supply and
workshop renovation.
Independent
Workshops
Branded
Service Centers
Authorized
Workshops
Independent workshops continue to dominate the market with their widespread
presence even outside 1st tier cities, despite the fast growing modern channels
ESTIMATED NUMBER OF END CHANNEL OUTLETS
Source: Indonesia Vehicle Workshop Association, End Channel Interviews and Ipsos BC Analysis
Build · Compete · Grow20 consulting.bc@ipsos.com
Mechanics and OEM recommendations are most influential for out-of-warranty
users, as they are perceived to have wide parts and car maintenance knowledge
CONSUMER PURCHASING DECISION KEY INFLUENCERS
Out-of-Warranty Consumers’ Key Influencers
0
1
2
3
4
5
Mechanics
Shop
Owner
Friends /
Family
Advertising
OEM
manual
book and
dealer
recommen
dations
Scale of 1-5:
 1: least influential
 5: most influential
• Mechanics, being at the front line of workshops,
have direct influence on consumers when they
discuss issues related to cars.
─ Mechanics generally have wide knowledge of
parts types and brands. Able to distinguish
quality and specification differences between
genuine and non-genuine parts
• OEM manual books and authorized dealer
recommendations are perceived to be very
trustworthy as these come directly from vehicle
manufacturers
─ Consumers tend to call dealer mechanics to
seek opinion on which non-genuine brands are
recommended if genuine parts are unavailable
• Mass advertising/publication is considered least
influential by consumers because:
─ Exact benefits are unknown and unclear
─ Consumers are risk averse and are less willing
to try new brands
Source: > 400 online surveys among out-of-warranty drivers
in Indonesia, and channel players interview
Build · Compete · Grow21 consulting.bc@ipsos.com
Due to Indonesian consumers’ lack of parts knowledge, they have a greater
tendency to rely on OEM recommendations and dealers for parts change
CONSUMER SERVICE PREFERENCES FOR GENUINE PARTS
Consumer Service Preference at Authorized Dealers by Requirement Type
0 10 20 30 40 50 60 70 80 90 100
Tire
0 10 20 30 40 50 60 70 80 90 100
0 10 20 30 40 50 60 70 80 90 100
0 10 20 30 40 50 60 70 80 90 100
Brake Pad
Gasoline Filter
Car Battery
OtherServiceChannels
AuthorizedDealers
Preference Between OEM and Non-OEM parts
46%
42%
12%
OEM only
OEM unless
it’s too
expensive
• Higher preference for genuine products is influenced by
consumers’ lack of awareness and higher quality assurance
and reliance.
• Growing popularity towards authorized outlets in Indonesia
results from perception that products are genuine.
– ~30% of consumers surveyed prefer to purchase from
authorized workshops even after warranty period expires
– ~28% of consumers prefer to purchase at parts retail
shops where genuine products are available.
No
preference
Source: >100 online surveys among out-of-warranty drivers in
Indonesia, and channel players interview
Build · Compete · Grow
1. INDONESIA AUTOMOTIVE AFTERMARKET INDUSTRY LANDSCAPE
2. INDONESIA AUTOMOTIVE AFTERMARKET DISTRIBUTION CHANNEL STRUCTURE
3. END CHANNEL SERVICE AND PRODUCT OFFERING
4. END USER PURCHASING BEHAVIOUR
5. ABOUT IPSOS BUSINESS CONSULTING
Build · Compete · Grow23 consulting.bc@ipsos.com
Local knowledge with a global reach
Ipsos Business Consulting Hubs Ipsos Offices
New York
London
Lagos Nairobi
Dubai
New Delhi
Mumbai
Bangkok
Kuala Lumpur
Jakarta
Singapore
Ho Chi Minh City
Manila
Hong Kong
Shanghai
Beijing
Seoul
Tokyo
Sydney
Wuhan
Johannesburg
Build · Compete · Grow24 consulting.bc@ipsos.com
Our Service Range in Automotive Related Industries
Automotive
Related
Auto OEM
Vehicle Parts
Other Vehicle
Related
Clients
Various types of vehicles:
• Commercial vehicles
• Passenger vehicles
Various types of parts & components
for vehicles:
• Engine and engine parts
• Filters
• Tires
• Other parts
Other auto-related products:
• Automotive lubricant
• Automotive painting
• Other products
Construction
Vehicle OEM
Product coverage
Various types of construction vehicles:
• Excavator
• Bulldozer
• Forklift
• Dump truck
• Other construction vehicles
25 Build · Compete · Grow
Authors of this Paper
Markus Scherer
Global Automotive
Sector Leader
Industry focus:
Automotive
Industrial machinery
Construction materials
Finance
T. +852 2839 0647
E. markus.scherer@ipsos.com
Douglas Cassidy
Head of Consulting
Indonesia
Industry focus:
Automotive
Banking
Asset Management
Construction
T. +6221 527 7701
E. douglas.cassidy@ipsos.com
Brenda Karnadi
Consultant
Indonesia
Industry focus:
Automotive
Construction
Finance
T. +6221 527 7701
E. brenda.karnadi@ipsos.com
Hutomo Hadi Saputro
Associate Consultant
Indonesia
Industry focus:
Automotive
Aquaculture
Industrial
T. +6221 527 7701
E. hutomo.saputro@ipsos.com
Authors of this Paper
consulting.bc@ipsos.com
Build · Compete · Grow26 consulting.bc@ipsos.com
About Ipsos Business Consulting
Ipsos Business Consulting is the specialist consulting division
of Ipsos, which is ranked third in the global research industry.
With a strong presence in 87 countries, Ipsos employs more
than 16,000 people.
We have the ability to conduct consulting engagements in
more than 100 countries. Our team of consultants has been
serving clients worldwide, through our 21 consulting "hubs"
since 1994. Our suite of solutions has been developed using
over 20 years experience of working on winning sales and
marketing strategies for developed, and emerging markets.
There is no substitute for first-hand knowledge when it comes
to understanding an industry. We draw on the detailed industry
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Indonesia's Growing Automotive Aftermarket Landscape

  • 1. Build · Compete · Grow 1 INDONESIA’S GROWING AUTOMOTIVE AFTERMARKET LANDSCAPE August 2016
  • 2. Build · Compete · Grow2 consulting.bc@ipsos.com Executive Summary • Significant opportunities exist for Indonesia’s growing aftermarket landscape, with over 11 million PVs (~77% of total PV population) to be out of warranty by 2020, with an out of warranty population CAGR of 9.7% from 2015-2020. • Indonesia’s developing used car market is gradually becoming more structured due to the greater availability of flexible financing terms, standardized and authorized dealership channels and better transparency of information. • Parts players will continue to rely on parts retail shops to ensure wide distribution coverage to end channels and users. • Parts players face key challenges in identifying and controlling qualified distributors whilst distributors face intensifying competition in the aftermarket landscape. • Though uncertified independent workshops continue to dominate the market due to their cheaper service fees and generalized service offerings, branded workshops are gaining popularity due to their higher service and product quality. The rise of branded workshops enable parts players to sell directly to branded end channels rather than going through the fragmented traditional market channel structure. • Widespread availability of reliable and trusted genuine parts in the independent aftermarket channels increases the challenge for non-genuine parts players. • Consumers’ general lack of awareness in vehicle parts results in them placing great reliance on mechanics and OEM recommendations to ensure convenient and hassle-free maintenance.
  • 3. Build · Compete · Grow3 consulting.bc@ipsos.com Implications for foreign and new market players to capture Indonesia’s aftermarket opportunity 1 2 3Distribution Structure Competition in IAM Consumer Purchasing Challenges faced by parts players: • Identifying qualified distributors to partner with • Tracking and controlling distributors’ purchasing and selling channels Branded workshops are gaining popularity due to higher quality servicing and parts offered. Gradually reducing high reliance on fragmented retail shops Foreign and new market players should stabilize and identify relevant partners to become distributors through standardized screening procedures Grow modern channels to generate opportunities for direct selling and enforcing greater control on product sales channels Availability of genuine parts in IAM intensifies the aftermarket competitive landscape for non- genuine parts. Consumer preference is shifting towards OEM genuine products: • Perceived to be higher quality and more reliable products • End channels enjoy higher margins and turnover Actions for non-genuine parts players to incentivize consumers and differentiate themselves from genuine parts: ─ Localize and re-assess product offerings ─ Redefine price positioning ─ Enhance branding and communications with end channels and users Consumers are highly influenced by mechanics at workshops. • Consumers show minimal willingness to learn or try new brands • Mechanics prioritize genuine products for parts critical to vehicle engine and usage • Consumers remain loyal to trusted mechanics and brands Foreign and new market players should target promotional strategies toward mechanics to ensure that they recommend specific parts brands Educate and increase consumers’ awareness through attractive promotional campaigns SituationImplications
  • 4. Build · Compete · Grow 1. INDONESIA AUTOMOTIVE AFTERMARKET INDUSTRY LANDSCAPE 2. INDONESIA AUTOMOTIVE AFTERMARKET DISTRIBUTION CHANNEL STRUCTURE 3. END CHANNEL SERVICE AND PRODUCT OFFERING 4. END USER PURCHASING BEHAVIOUR 5. ABOUT IPSOS BUSINESS CONSULTING
  • 5. Build · Compete · Grow5 consulting.bc@ipsos.com By 2020 over 11 million passenger vehicles in Indonesia will be out of warranty, providing a significant opportunity in the automotive aftermarket PV POPULATION BREAKDOWN 3.2 0.3 0.4 0.5 0.4 0.6 0.8 0.9 1.1 1.1 Before 2006 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2020f • Significant growth is expected for out-of-warranty vehicles in Indonesia. Some background: – With majority of the population residing outside 1st tier cities, consumers have greater preference for second-hand vehicles due to their lower prices and also the limited number of PV dealerships available in their regions – Though Jakarta’s governor plans to limit vehicle age to 10 years in the city to reduce traffic congestion, no regulations have been implemented thus far regarding vehicle age limitations. PV Population Breakdown by Car Age* Car Age 0-3 3-8 >8 Unit: Million 123456789≥10 Out of warranty by 2015 CAGR 15-20 2.3% 8.9% 10.4% Age in Years CAGR 7.7% Car Age > 8 years Car Age 3 – 8 years Car Age 0 – 3 years 10.2 32% 38% 30% 23% 43% 14.7 34% * PV population and sales include light-duty/pick-up trucks
  • 6. Build · Compete · Grow6 consulting.bc@ipsos.com Even with a low PV ownership ratio, Indonesia’s encouraging annual sales have been driven by its favorable demographic trends, particularly in 1st tier cities PV OWNERSHIP RATIO (PER 1,000) BY REGION PV Ownership Ratio (per 1,000) Medan 91 Jakarta 142 Bandung 81 Surabaya 69 Source: BPS 2014 1st Tier Cities Jakarta Surabaya Bandung Medan Population 10,075,000 2,856,000 2,470,000 2,191,000 2014 GDP per Capita (USD) 11,476.9 9,029.6 4,725.8 4,557 2014 GDP Contribution to National (%) 16.04% 3.56% 1.62% 1.37% 2014 Spending per Capita (USD) 140.2 117.2 105.8 80.8 • Indonesia’s PV ownership ratio in 2015 was just 40 PV per 1,000 people. • Areas with higher PV ratios (e.g. Medan) reflect a local tendency to purchase cars for image and social status, while cities with lower PV ratios (e.g. Surabaya) tend to be in close proximity to satellite cities from which PV owners often commute on a daily basis
  • 7. Build · Compete · Grow7 consulting.bc@ipsos.com The new arrival of LCGC’s in the aftermarket is expected to disrupt the dominance of MPV’s in the long run, and extend the success of Japanese OEM’s in Indonesia OUT OF WARRANTY PASSENGER VEHICLE POPULATION Others* MPV SUV 2015 Out-of-warranty vehicles by segment* *Others includes citicar and hatchback 4% 48% 20% 11% 19% • The differences in proportion between out-of-warranty models could affect differences in service and purchasing channels being used, consumer preferences, and ultimately the types of parts and price points to sell in the market. LDT Sedan * PV population and sales include light-duty/pick-up trucks 2015 Out-of-warranty vehicles by brand* 7.14 million units Others Mitsubishi Suzuki Nissan Honda Daihatsu Toyota 46.8% 16.9% 8.9% 8.1% 3.4% 7.3% 8.5% *Others includes Hyundai, KIA, Chevrolet and Volkswagen
  • 8. Build · Compete · Grow8 consulting.bc@ipsos.com Improvements in Indonesia’s underdeveloped used car market can be seen through greater standardization of dealer channels and information transparency Indonesia Used Car Market Overview Policies / Regulations Selling Practice Consumer Purchasing Practice Indonesia Used Car Market Development • Indonesia has no formal national association in place • Dealer clusters create own community-based associations to ensure comparable prices within the cluster, and gatherings to enhance support for the cluster • Dealership industry is fragmented and unstructured • Independent dealers continue to dominate the market due to cheaper prices by taking smaller margins than chained/branded dealers, and the ability to negotiate prices • Greater focus on fast-moving vehicles such as MPV & SUV • Prefer trusted independent dealers due to cheaper prices • Leverage online car sales channels for price comparisons • Whilst around 90% of new cars are purchased on credit, ~40% of used car purchases are made by cash, as this enables consumers to enjoy 20-30% lower prices INDONESIA USED CAR MARKET OVERVIEW • Governing body regulating used car market: ─ Indonesia should adopt Thailand’s used car association model to ensure data (price and sales volume), selling terms and market information are centralized ─ Adopting Thailand’s used car market association system would allow for greater transparency and customer assurance • OEM certified used car dealer channels are emerging in Indonesia where consumers benefit from its greater quality assurance and better sales terms reliability • Used car financing systems in Indonesia should adopt more favorable contract terms (e.g. the provision of warranty period for certain part changes) to drive market growth • Growth of online selling channels (e.g. Carmudi) will enhance market price transparency as consumers can more easily compare prices from various channels Imported Used Cars • Regulations from the Ministry of Trade make it almost impossible to import used cars into Indonesia. Typically only government bodies and diplomats are permitted. • Even if regulations are complied with, customs can charge up to 300% duty on vehicle value
  • 9. Build · Compete · Grow9 consulting.bc@ipsos.com The fragmented market dominated by independent and individual dealers provides branded and OEM certified dealers ample room to grow Indonesia Used Car Dealership Types Individual Sellers Independent Dealers Branded / Chained Dealers OEM Certified Used Car Dealers Clustered Standalone • Sellers with no legal business entities and who typically sell family/friends’ personal cars directly to end users • Would engage with independent dealers to help sell cars and enable selling with credit financing • Mainly located in 1st tier cities • Create community group within the cluster to help regulate sales and pricing structure • Mainly located in outskirt/rural regions where individual sellers would partner with them to help sell vehicles • Chained and standardized dealerships where price setting methods, marketing tools and sales terms are regulated • E.g. Mobil 88, a subsidiary of Astra, is the largest used car branded dealer chain with 22 dealers across Indonesia and its own online marketplace platform • Emerging dealership type in Indonesia • OEM guarantee for vehicle reconditioning and warranty period • E.g. BMW Indonesia currently has 2 certified used car dealers • Assured resale value: e.g. Hyundai’s buy-back program Auction House • Main supplier of cars to independent dealers • 95% of sales go to independent dealers and 5% to end users • Cars are supplied to them mainly by leasing companies INDONESIA USED CAR DEALERSHIP STRUCTURE
  • 10. Build · Compete · Grow10 consulting.bc@ipsos.com The underdeveloped market provides favorable opportunities to OEM certified and branded dealers offering price assurance and quality vehicles USED CAR MARKET PURCHASING CHANNELS 18% 9% 2% 48% 45% 36% 33% 46% 62% Jakarta Other 1st Tier Cities* 2nd Tier Cities** Used Car Sales Comparison Between New Car vs. Used Car Sales - 2016 • Growing trend for OEM certified dealers in Indonesia: ─ Only several car brands have opened their own used car dealers (e.g. BMW, Mercedes Benz, Hyundai and Toyota) ─ Attractive for OEM to establish own network: greater control over resale value, reconditioning for engine quality ─ Buyers preference towards OEM certified dealers due to greater vehicle quality, price assurance despite typically higher prices, and warranty provided with purchase • Independent dealers continue to drive the used car market, particularly outside Jakarta, due to their widespread presence throughout Indonesia, flexible negotiation for prices, lower margins, quick turnover and wider variety of car age available New Car Sales Used Car Dealer Purchasing Channels - 2016 39% 31% 22% 61% 69% 78% Jakarta Other 1st Tier Cities* 2nd Tier Cities** Independent Dealers*** Branded Dealers OEM Certified Dealers **2nd Tier Cities surveyed include: Pekanbaru, Makassar, Palembang, Yogyakarta, Semarang and Balikpapan *Other 1st Tier Cities include: Bandung, Surabaya and Medan ***Independent dealers include individuals, cluster, and standalone dealers
  • 11. Build · Compete · Grow11 consulting.bc@ipsos.com Used Car Dealership Financing company End-users ~ 60% ~ 40% Less-established used car dealers, primarily located outside 1st tier cities, have higher proportion of cash sales as PVs sold are typically older (>10 years old) USED CAR FINANCING OVERVIEW • Common contractual terms:  Loan value up to 70-75% of the used car price  Up to five years payment period  Approval in 3 – 7 days  Interest rate of 8.5% to 9.5% when using bank financing. Interest rate of 11% to 13% when using private financing companies  Indonesia’s financing companies do not offer warranty on parts, and partnered insurance companies typically only insure two service types: body repair and stolen cars • Independent used car dealers prevent exposure from buyers’ financial risks through partnering with multi and auto-financing companies. • Loans from financing companies are not granted for cars over 10 years old due to their much shorter lifespan, higher risk of damage and depreciated value • Larger proportion of cash payment compared to new car purchases as price can be ~20-30% lower • Down payment required for used cars: • Financing from banks (regulated by Bank of Indonesia): 30% • Financing from private financing companies: flexible Used Car Payment Practice Overview of Used Car Financing Companies Cash USED CAR FINANCING OVERVIEW
  • 12. Build · Compete · Grow 1. INDONESIA AUTOMOTIVE AFTERMARKET INDUSTRY LANDSCAPE 2. INDONESIA AUTOMOTIVE AFTERMARKET DISTRIBUTION CHANNEL STRUCTURE 3. END CHANNEL SERVICE AND PRODUCT OFFERING 4. END USER PURCHASING BEHAVIOUR 5. ABOUT IPSOS BUSINESS CONSULTING
  • 13. Build · Compete · Grow13 consulting.bc@ipsos.com OES Channel Independent Aftermarket Channel Structure *Non-OE distributor: OE parts manufacturers’ after-market product and brand Parts retail shops and wholesalers are the main channel distributing both genuine and non-genuine parts to end channels CHANNEL STRUCTURE OVERVIEW OES Parts Manufacturers Vehicle OEM Authorized Dealers (2S/3S) 𝟏 𝒔𝒕 Tier Distributor Local Non-OE Parts Manufacturers Direct Importer Parts Retail Shop / Wholesaler End-users Uncertified Independent Workshops Branded Workshops Primary Channel Secondary Channel Authorized Parts Supplier Foreign Non-OE Parts Manufacturers Non-OE distributor* OES After-market Manufacturers End Channel Workshops OE Manufacturers Certified Independent Workshops
  • 14. Build · Compete · Grow14 consulting.bc@ipsos.com By relying on its dealership networks and Astra Otoparts subsidiary, Astra continues to dominate Indonesia’s automotive landscape ASTRA INTERNATIONAL TBK CHANNEL STRUCTURE OVERVIEW Astra International Channel Structure Mapping Astra International Tbk: • Astra’s car dealerships account for over 50% of new PV sales in Indonesia Genuine Parts: • Since 2016, all genuine parts distributed by authorized suppliers must go through authorized dealers prior to entering independent aftermarket channels • For Toyota, there are currently 37 authorized main dealers in Indonesia Non-Genuine Parts produced by OE manufacturers have 2 types of distribution networks: • Through Astra Otoparts or independent non-OE distributors • Astra Otoparts has developed one of the leading franchise branded workshops in Indonesia – Shop and Drive, with over 360 stores nationwide. OES Parts Manufacturers Vehicle OEM Authorized Dealers (2S/3S) Parts Retail Shop / Wholesaler End-users Independent Workshops Branded Workshops Primary Channel Secondary Channel Authorized Parts Supplier (e.g. Toyota Astra Motors) OES After-market Manufacturers End Channel workshops OE Manufacturers Non-OE distributor* Astra Otoparts *Non-OE distributor: OE parts manufacturers’ after-market product and brand
  • 15. Build · Compete · Grow15 consulting.bc@ipsos.com Despite policies and procedures enforced by brand principles, selling and purchasing terms for many distributors remain fragmented and unenforced Least Prominent Most Prominent Main Channel Products Offered Policies and Procedures Multiple Parts for One Car Brand One Part Type for One Brand Multiple Parts for One Brand Authorized Parts Supplier Importers Non-OE Distributors 1st Tier Distributors • Genuine parts supplied directly by vehicle OEMs • Packaging is regulated by OEMs (tracking code) • Non-genuine parts and brands that have limited presence • Directly imported parts • Non-genuine parts from OES after- market manufacturers • Non-genuine parts from non-OE manufacturers • Greater specialization • Authorized dealers • Parts retail shops • Parts retail shops • Known end channels • 1st tier distributors • Parts retail shops • Parts retail shops • Larger end channels • Nationwide through main dealers in each region • Within city/region • Cross-city by request • Within city/region • Cross-city by another distributor • Typically have representative offices nationwide • Appointed by vehicle OEM to be its authorized distributors • Heavily regulated in terms of sales channel coverage and margins • Have pre-existing partnership with foreign parts players • Minimal procedures followed to supply parts • Regulated by brand principles, mainly to prevent them from carrying a different brand of the same part type • Typically a licensed business entity with a warehouse for inventory stock Channel Coverage Geographical Coverage KEY CHANNEL ACTORS
  • 16. Build · Compete · Grow16 consulting.bc@ipsos.com Establishing direct selling opportunities through partnering with the growing branded workshop channels can assist players’ efforts to control distributors Distribution Challenges for Parts Players Operational Challenges for Authorized Distributors Identifying Relevant / Reliable Partners Controlling Selling Terms and Procedures Recommendations to Overcome Distribution Challenges Selling Terms and Procedures Intensifying Competitive Landscape • Foreign non-genuine parts players face a shortage of qualified and capable distributors to partner with • Screening procedures are implemented to ensure distributors have the capability and resources to optimize distribution in a given region • Contracts force distributors to honor proper channels and margins, although parts are hard to track beyond this stage. • Authorized distributors sometimes seek alternative, cheaper purchasing channels (e.g. direct importers) • High purchase price and selling price list provided by parts players limit flexibility in setting price markups to remain competitive in the market • Larger distributors who can sell at lower prices (e.g. bulk discounts) could potentially cannibalize smaller players • Parts players, as part of their expansion plans, continue to add distributors with different contractual terms and procedures for each partnership. ─ The resulting difference in discounts and incentives becomes unfavorable for distributors in the same coverage area • Direct selling to end channels through branded workshops. This tactic allows for greater control of product supply, selling terms and higher margins through cutting out the intermediary (e.g. Bosch through their Bosch Car Service) • Standardizing selling terms, price and geographical coverage to ease intense competition • Offering incentives, training and development to motivate qualified and capable distributors DISTRIBUTION CHALLANGES
  • 17. Build · Compete · Grow17 consulting.bc@ipsos.com Retailers in 1st tier cities are typically brand-specialized shops, while those in 2nd tier cities sell a variety of products and brands as mass retailers Parts Retail Shops • No services offered. Most outlets act as passive wholesalers that facilitate gross selling • Largest channel for parts purchasing. Main supplier for end users, independent and branded workshops. Workshops tend to not stock parts and purchase on ad hoc basis for retailers Brand-Specialized Retailer Mass Retailer • Sell spare parts and a variety of brands for one to two specific car brands (e.g. Honda, Toyota parts retailer) • Typically sell both the genuine and non-genuine brands of the products • Mostly located in 1st tier cities • Offer wide range of products and multiple brands at varying levels of quality and price • Typically sell non-genuine brands, with some proportion of genuine brands • Mostly located in 2nd tier cities • Typically purchase from 1st tier distributor or direct importer • Sell directly to end users or end channels; also sell to mass retailers in 2nd tier cities • Typically purchase from 1st tier distributor, direct importer, or brand-specialized retailer • Sell directly to end users or end channels in remote regions in 2nd tier cities Key Characteristics Purchasing & Selling Channel Description Major Models RETAILER OVERVIEW
  • 18. Build · Compete · Grow18 consulting.bc@ipsos.com Trend towards branded workshops will result in specialization of service and product offerings, as well as greater control in managing quality and authenticity Parts available Future Trend Branded WorkshopsAuthorized Dealers Uncertified Independent WS Certified Body Repair Shops Services Offered Major authorized OES channel for new cars Chained workshops – franchised and standardized Partnered and verified by insurance companies Traditional unchained channel for general manual services and repairs Provides all services and maintenance needed for specific OEM brand Greater specialization (e.g. AC repair, tire change shops, battery change) Specialized in body repair. Only ~5-10% can provide general services Generalists • Less advanced in terms of technology and equipment Complete stock for OEM genuine parts Higher repair capability in terms of mechanics and equipment Larger stock for their specialized parts type Only stock parts for body repair, and very limited stock for other parts type Limited inventory stock • Carry fast-moving replacement parts • Purchase on ad-hoc basis from retailers Slower growth than branded workshops due to long waiting time and more expensive fees Fast growth due to high service quality, capable mechanics, better equipment and trustworthiness Growth is limited - not expected to branch out to provide other services Higher growth in outskirts/rural regions Description END-USER CHANNEL TRENDS
  • 19. Build · Compete · Grow19 consulting.bc@ipsos.com ~250-300 ~550-600 ~1,200- 1,500 ~45-65 ~60-70 ~330-360 ~30-40 ~50-60 ~250-300 ~50-60 ~50-70 ~200-250 0 500 1000 1500 Bandung Medan Surabaya Jakarta Estimated Number of End Channel Outlets in 2015 • Traditional end channel outlets remain the largest contributor for the after-market in Indonesia – Their success is due to cheaper service fees, quicker service times and widespread outlets throughout each city • Independent workshops are gradually being targeted by lubricant, tire and parts brands to become their sponsored workshops – Example: Bridgestone, through its workshop brand ‘Toko Model’, rebrands independent workshops in turn for equipment supply and workshop renovation. Independent Workshops Branded Service Centers Authorized Workshops Independent workshops continue to dominate the market with their widespread presence even outside 1st tier cities, despite the fast growing modern channels ESTIMATED NUMBER OF END CHANNEL OUTLETS Source: Indonesia Vehicle Workshop Association, End Channel Interviews and Ipsos BC Analysis
  • 20. Build · Compete · Grow20 consulting.bc@ipsos.com Mechanics and OEM recommendations are most influential for out-of-warranty users, as they are perceived to have wide parts and car maintenance knowledge CONSUMER PURCHASING DECISION KEY INFLUENCERS Out-of-Warranty Consumers’ Key Influencers 0 1 2 3 4 5 Mechanics Shop Owner Friends / Family Advertising OEM manual book and dealer recommen dations Scale of 1-5:  1: least influential  5: most influential • Mechanics, being at the front line of workshops, have direct influence on consumers when they discuss issues related to cars. ─ Mechanics generally have wide knowledge of parts types and brands. Able to distinguish quality and specification differences between genuine and non-genuine parts • OEM manual books and authorized dealer recommendations are perceived to be very trustworthy as these come directly from vehicle manufacturers ─ Consumers tend to call dealer mechanics to seek opinion on which non-genuine brands are recommended if genuine parts are unavailable • Mass advertising/publication is considered least influential by consumers because: ─ Exact benefits are unknown and unclear ─ Consumers are risk averse and are less willing to try new brands Source: > 400 online surveys among out-of-warranty drivers in Indonesia, and channel players interview
  • 21. Build · Compete · Grow21 consulting.bc@ipsos.com Due to Indonesian consumers’ lack of parts knowledge, they have a greater tendency to rely on OEM recommendations and dealers for parts change CONSUMER SERVICE PREFERENCES FOR GENUINE PARTS Consumer Service Preference at Authorized Dealers by Requirement Type 0 10 20 30 40 50 60 70 80 90 100 Tire 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Brake Pad Gasoline Filter Car Battery OtherServiceChannels AuthorizedDealers Preference Between OEM and Non-OEM parts 46% 42% 12% OEM only OEM unless it’s too expensive • Higher preference for genuine products is influenced by consumers’ lack of awareness and higher quality assurance and reliance. • Growing popularity towards authorized outlets in Indonesia results from perception that products are genuine. – ~30% of consumers surveyed prefer to purchase from authorized workshops even after warranty period expires – ~28% of consumers prefer to purchase at parts retail shops where genuine products are available. No preference Source: >100 online surveys among out-of-warranty drivers in Indonesia, and channel players interview
  • 22. Build · Compete · Grow 1. INDONESIA AUTOMOTIVE AFTERMARKET INDUSTRY LANDSCAPE 2. INDONESIA AUTOMOTIVE AFTERMARKET DISTRIBUTION CHANNEL STRUCTURE 3. END CHANNEL SERVICE AND PRODUCT OFFERING 4. END USER PURCHASING BEHAVIOUR 5. ABOUT IPSOS BUSINESS CONSULTING
  • 23. Build · Compete · Grow23 consulting.bc@ipsos.com Local knowledge with a global reach Ipsos Business Consulting Hubs Ipsos Offices New York London Lagos Nairobi Dubai New Delhi Mumbai Bangkok Kuala Lumpur Jakarta Singapore Ho Chi Minh City Manila Hong Kong Shanghai Beijing Seoul Tokyo Sydney Wuhan Johannesburg
  • 24. Build · Compete · Grow24 consulting.bc@ipsos.com Our Service Range in Automotive Related Industries Automotive Related Auto OEM Vehicle Parts Other Vehicle Related Clients Various types of vehicles: • Commercial vehicles • Passenger vehicles Various types of parts & components for vehicles: • Engine and engine parts • Filters • Tires • Other parts Other auto-related products: • Automotive lubricant • Automotive painting • Other products Construction Vehicle OEM Product coverage Various types of construction vehicles: • Excavator • Bulldozer • Forklift • Dump truck • Other construction vehicles
  • 25. 25 Build · Compete · Grow Authors of this Paper Markus Scherer Global Automotive Sector Leader Industry focus: Automotive Industrial machinery Construction materials Finance T. +852 2839 0647 E. markus.scherer@ipsos.com Douglas Cassidy Head of Consulting Indonesia Industry focus: Automotive Banking Asset Management Construction T. +6221 527 7701 E. douglas.cassidy@ipsos.com Brenda Karnadi Consultant Indonesia Industry focus: Automotive Construction Finance T. +6221 527 7701 E. brenda.karnadi@ipsos.com Hutomo Hadi Saputro Associate Consultant Indonesia Industry focus: Automotive Aquaculture Industrial T. +6221 527 7701 E. hutomo.saputro@ipsos.com Authors of this Paper consulting.bc@ipsos.com
  • 26. Build · Compete · Grow26 consulting.bc@ipsos.com About Ipsos Business Consulting Ipsos Business Consulting is the specialist consulting division of Ipsos, which is ranked third in the global research industry. With a strong presence in 87 countries, Ipsos employs more than 16,000 people. We have the ability to conduct consulting engagements in more than 100 countries. Our team of consultants has been serving clients worldwide, through our 21 consulting "hubs" since 1994. Our suite of solutions has been developed using over 20 years experience of working on winning sales and marketing strategies for developed, and emerging markets. There is no substitute for first-hand knowledge when it comes to understanding an industry. We draw on the detailed industry expertise of our consultants which has been accumulated through practical project execution. Founded in France in 1975, Ipsos is controlled and managed by research and consulting professionals. They have built a solid Group around a multi-specialist positioning. Ipsos is listed on Eurolist - NYSE-Euronext. The company is part of the SBF 120 and the Mid-60 index and is eligible for the Deferred Settlement Service (SRD). ISIN code FR0000073298, Reuters ISOS.PA, Bloomberg IPS:FP Build · Compete · Grow At Ipsos Business Consulting we focus on maintaining our position as a leading provider of high quality consulting solutions for sales and marketing professionals. We deliver information, analysis and recommendations that allow our clients to make smarter decisions and to develop and implement winning market strategies. We believe that our work is important. Security, simplicity, speed and substance applies to everything we do. Through specialisation, we offer our clients a unique depth of knowledge and expertise. Learning from different experiences gives us perspective and inspires us to boldly call things into question, to be creative. By nurturing a culture of collaboration and curiosity, we attract the highest calibre of people who have the ability and desire to influence and shape the future. Our Solutions: Go-to-Market Market Sizing Business Unit Strategy Pricing Competitive Insights Forecasting Partner Evaluation Brand Strategy & Value Innovation Scouting B2B Customer Segmentation Optimal Channel Strategy Sales Detector
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