Local tire producers expected to look abroad

JAKARTA (JP): Flat automobile sales and increasing competition in the domestic radial tire market will likely force Indonesian tire producers to turn to export markets to roll out their wares.

Domestic demand for radial tires will likely remain flat next year, standing at some 3 million tires of various sizes, Marketing Director of PT Bridgestone Indonesia H. Kawano said yesterday.

Meanwhile, the national capacity of the five radial tire producers has expanded to 10 million per year. The five producers are Bridgestone, Goodyear Indonesia, Gadjah Tunggal, Indonesia Tire Rubber (Intirub), and Ono-Ban, which entered the fray earlier this month.

"Competition in the domestic market must be very tight next year, and everybody will have to export more," Kawano said after launching Bridgestone's newest radial tires -- Regno 390, Regno GR5000 and S-02.

Domestic radial tire output reached 4.971million last year. Of these Indonesian-made tires, 2.84 million were sold domestically and 2.13 million entered the international market.

Within the domestic market, 800,000 tires went to car assemblers and 2.04 million tires went to replacement markets.

Kawano noted that total domestic tire output, including radial tires, reached 13.9 million last year. Some 9.2 million tires of all types were sold domestically and the remaining 4.7 million were exported.

Of the 9.2 million tires sold in the domestic market, 2.1 million went to car assemblers and 7.1 million were sold to replacement markets.

Next year, domestic demand for automobile tires will likely remain flat at 9.2 million because of stagnant automobile sales, Kawano said.

According to the Indonesian Automotive Industry Association, domestic car sales during the first nine months of this year dropped by 17 percent to 230,000 units, compared with the same period last year.

The association projected that this year's total domestic automobile sales would drop to some 240,000 units from last year's level of 270,313 vehicles.

The drop is attributed to the sales of duty- and tax- free Timor cars since September as well as to the government's tight money policy.

With so much competition at home for a limited market, tire producers will likely be forced to export their tires.

As such, Indonesia's tire exports are projected to reach 6.4 million this year and are expected to grow by 65 percent next year.

Bridgestone claims that it controls about 35 percent of the domestic tire market and supplies about 11 percent of Indonesia's tire exports.

John Arsyad, one of Bridgestone's sales managers, said Bridgestone supplies tires to all car assemblers except to PT Indonesian Republic Motor Company, which assembles Ford cars.

According to the Ministry of Industry and Trade, Indonesia currently has 21 tire manufacturers with combined annual capacity of 18.4 million automobile tires and tubes, 25.5 million motor cycle tires and tubes, and 86.1 million bicycle tires and tubes.

Indonesia's exports of all tire products have grown by 46.3 percent a year during the last three years, and are estimated to earn $351.1 million in 1999, up from the this year's estimated export value of some $179.7 million. (rid)