Indonesia Automotive Adhesives Market Outlook to 2028

Indonesia Automotive Adhesives Market Overview

The Indonesia Automotive Adhesives Market size was valued at USD 0.8 billion in 2023. The growth of this market is primarily driven by the rapid expansion of the automotive sector in Indonesia, with increasing demand for lightweight and fuel-efficient vehicles.

The major players in the Indonesia Automotive Adhesives market include 3M Company, Henkel AG & Co. KGa A, Sika AG, and local players such as PT. Intanwijaya Internasional Tbk and PT. Fajar Chemical. These companies offer a wide range of adhesive solutions, including structural adhesives, sealants, and tapes, catering to the diverse needs of automotive manufacturers in Indonesia.

In July 2024, Henkel AG & Co. KGa A reported strong business performance in the first half of the year, achieving sales of 10.8 billion and an organic sales growth of 2.9%. The company raised its earnings outlook 2024, driven by higher profit expectations in the Consumer Brands unit and increased marketing investments.

The Java region, particularly Jakarta and Surabaya, dominated the Indonesia Automotive Adhesives Market in 2023. This dominance can be attributed to the regions status as the manufacturing hub of Indonesia, with a high concentration of automotive assembly plants and suppliers.

Indonesia Automotive Adhesives Market Segmentation

The Indonesia Automotive Adhesives Market is segmented into adhesive type, vehicle type, and region.

By Adhesive Type: The market is segmented by adhesive type into epoxy adhesives, polyurethane adhesives, acrylic adhesives, and others. Polyurethane adhesives hold the dominant market share in 2023, driven by their versatility and high bonding strength.

By Vehicle Type: The market is segmented by vehicle type into passenger cars, commercial vehicles, and two-wheelers. Passenger cars hold the largest market share in 2023, attributed to the increasing production and sales of cars in Indonesia.

By Region: The market is segmented by region into North, South, East, and West. The Western region dominated the market in 2023 due to its well-developed infrastructure and concentration of automotive manufacturing plants. The Northern region is expected to see growth by 2028, driven by new investments in automotive production facilities.

Indonesia Automotive Adhesives Market Competitive Landscape

Company Name

Establishment Year

Headquarters

3M Company

1902

St. Paul, Minnesota, USA

Henkel AG & Co. KGa A

1876

Dsseldorf, Germany

Sika AG

1910

Baar, Switzerland

PT. Intanwijaya Internasional Tbk

1982

Jakarta, Indonesia

PT. Fajar Chemical

1995

Surabaya, Indonesia

3M Company: In July 2024, 3M Company announced strong second-quarter results, reporting sales of $6.3 billion. The company raised its full-year adjusted earnings outlook to $7.00 to $7.30 per share, reflecting improved operational execution. 3M continues to focus on innovation and sustainability, aiming to make some impacts on various markets.

Sika AG: In July 2024, Sika reported record sales of CHF 5.83 billion in the first half of the year, reflecting a 12.8% increase in local currencies. The company successfully integrated the MBCC acquisition, enhancing its product offerings and aiming for sales growth of 6-9% in 2024, while also achieving Science Based Targets initiative validation for its net-zero emissions goals.

Indonesia Automotive Adhesives Market Analysis

Indonesia Automotive Adhesives Market Growth Drivers:

Rising Automotive Production: Rising automotive production in Indonesia is a major growth driver, with vehicle production reaching 1.34 million units in 2022, marking a 17% increase from the previous year. Supported by government policies promoting foreign investment, Indonesia is positioned as the second-largest car producer in Southeast Asia, attracting substantial investment and enhancing market potential.

Increasing Demand for Lightweight Vehicles: The global push for sustainability is driving demand for lightweight vehicles in Indonesia. Automotive adhesives are crucial for achieving weight reduction, which enhances fuel efficiency and reduces carbon emissions. As the market shifts towards more environmentally friendly vehicles, manufacturers are increasingly utilizing lightweight materials, making adhesives essential in vehicle design and production.

Expansion of Electric Vehicle (EV) Market: The expansion of the electric vehicle (EV) market in Indonesia is a key growth driver, with projections indicating sales could reach 50,000 units by 2024, an substantial increase from 17,000 units in 2023. Government incentives, including tax breaks and infrastructure development, are fostering a favourable environment for EV adoption and production in the country.

Indonesia Automotive Adhesives Market Challenges:

Fluctuating Raw Material Prices: The automotive adhesives market in Indonesia faces challenges from fluctuating raw material prices, particularly for resins and polymers. For example, crude oil prices have risen from around $40 per barrel in early 2021 to over $90 in 2023, impacting manufacturers' profitability and leading to higher product costs.

Regulatory Compliance: Compliance with stringent environmental regulations poses challenges for market players in Indonesia. Adhering to local and international standards requires continuous investment in research and development to innovate eco-friendly adhesive solutions. The Indonesian National Standards (SNI) mandate specific testing processes, increasing operational costs for manufacturers striving to meet regulatory requirements.

Indonesia Automotive Adhesives Market Government Initiatives:

Electric Vehicle Subsidy Scheme (2023): Indonesia introduced a subsidy scheme to promote electric vehicle (EV) purchases, offering consumers incentives ranging from IDR 8 million to IDR 80 million (USD 525 to USD 5,250) based on vehicle type. This aims to stimulate EV adoption and support the government's target of 2.2 million electric cars by 2030.

Infrastructure Development for EV Charging Stations: The state-owned electricity company, PLN, is constructing 1,401 electric vehicle charging stations by 2025. This initiative enhances EV infrastructure, facilitating the transition to electric mobility and aligning with Indonesia's commitment to achieving net-zero emissions by 2060.

Indonesia Automotive Adhesives Market Future Market Outlook

The Indonesia Automotive Adhesives Market is expected to grow in the coming years. The market is likely to see a shift towards more organized players with a focus on sustainability and eco-friendly adhesive solutions.

Indonesia Automotive Adhesives Market Future Market Trends:

Increased Adoption of Eco-friendly Adhesives: Over the next five years, the adoption of eco-friendly adhesives in Indonesia is expected to rise substantially, driven by increased awareness of environmental sustainability. Many automotive manufacturers are projected to use water-based and bio-based adhesives by 2028, reflecting a shift towards sustainable manufacturing practices and compliance with global environmental standards.

Integration of Advanced Materials in Vehicle Manufacturing: The integration of advanced materials, such as composites and lightweight metals, is anticipated to be a major trend in Indonesia's automotive adhesives market. By 2028, most new vehicle models are expected to incorporate these materials, necessitating specialized adhesives that enhance fuel efficiency and meet the evolving demands of the automotive industry.
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