Increasing population size and a medium rate of economic growth of Indonesia give great opportunity business for the automotive industry. Car ownership is still low in Indonesia. Based on last global survey (2014) the car ownership in Indonesia was 4%, much lower than Malaysia (82%), Thailand (51%), even Philippines 6% (statistic.com).
In terms of product type, low product price such as Low-Cost Green Car (LCGC) and Low Multi-Purpose Vehicle (LMPV) that more affordable for low budget consumers push the market size up faster. Their contribution to boosting growth is significant since their market share account of around 20-23% for LCGC and 30% for LMPV.
As the car population has been increasing, authorized agents (ATPM), need to expand their workshop network. All of the workshop integrated with sales point e.g. dealer, but not all of the dealer outlets equipped with workshop.
There are 3 types of dealer outlets based on their business function namely sales of the car, sales of spare parts and after-sales services:
- 1S dealer: Dealer that only sell cars
- 2S dealer: Dealer that sell cars and spare-parts
- 3S dealer: Dealer that sell cars and spare-parts and provide after sales service
Besides the population has been growing, the vehicles also spreading in wider areas, both inside and outside their current network. Inside area means the new dealers opened inside the current network, for instance in small cities in Java island. While outside network means new dealers opened in the geographic area where no dealer outlet before, for instance in Papua island. Following the outspreading of the vehicles, the ATPMs need to develop their workshop network wider and denser; otherwise, the consumers find difficulty for the maintenance and repairing. There are 2 actions of the ATPMs on how they expand their workshop network:
- Develop only new 3S dealers, not only in big cities but also in small cities and suburban. No more new 1S or 2S dealers
- Up-grade 1S and 2S dealers to become 3S dealers
- The workshop is strategic in the automotive business for several reasons:
- The services generate money that increases the companies’ revenue.
- Consumer satisfaction and build loyalty.
Nowadays people have high mobility and bring the car out of their town more often than there were in the past. They need assurance that in other cities, the workshops are available for the case something wrong upon their cars. Brand cars with the wide dealer network would be one of the tops of consumers’ preference when one’s buys. Customer satisfaction will lead to loyalty for the next vehicle purchasing.
- The best place for car treatment. Authorized workshops are the ones who know the products and the right one who provide the best maintenance and repair of the products. Hence the performance of the vehicle can be maintained properly, and indirectly support the secondary market.
- Supporting to secure future sales. Good availability of workshop with best after sales services bring in customer satisfaction and loyalty and all of these secure future sales of the brands.
In summary, nowadays, automotive authorized agents not only sell the unit of a car, but a car package consists of car and high quality of the vehicle services. This trend not only occurs in premium cars market segment like it was in the past but in most automotive brands including LMPV and LCGC categories.