Why Astra Otoparts Defies Indonesia's Auto Slump as EV Growth Fuels New Upside, CLSA Says

JAKARTA, Investortrust.id — PT Astra Otoparts Tbk (AUTO) is emerging as one of Indonesia's most resilient automotive plays, with CLSA arguing the company is well positioned to outperform despite the country's sluggish vehicle market thanks to its diversified business model, strong aftermarket franchise, and growing exposure to electric vehicles.

The brokerage said Astra Otoparts continues to generate steady earnings even after Indonesia's passenger car market weakened over the past three years, highlighting the company's defensive characteristics and inexpensive valuation.

Indonesia is Southeast Asia's largest automotive market, making Astra Otoparts a key barometer for manufacturing activity and consumer demand.

The company's ability to grow despite weak industry sales suggests that investors are increasingly rewarding diversified automotive suppliers with exposure to aftermarket services, commercial vehicles, and electric mobility rather than relying solely on new car sales.

In a report titled Top-tier Auto Parts published on June 30, CLSA analysts Aimee Garibaldi and Sarina Lesmina said Astra Otoparts has maintained industry leadership through a balanced portfolio spanning original equipment manufacturing (OEM), replacement parts, exports, and distribution.

That strategy helped the company deliver record 2025 revenue of Rp19.9 trillion ($1.25 billion), up 4% from a year earlier, while net profit climbed 8% to Rp2.2 trillion ($138 million).

Momentum has continued into 2026.

First-quarter revenue rose 7% year over year, while net income increased 11%, supported by improving domestic passenger vehicle sales, stronger commercial vehicle demand linked to government infrastructure projects, and accelerating hybrid and electric vehicle adoption.

CLSA said Astra Otoparts' greatest strength lies in the diversity of its earnings.

Revenue is evenly split between manufacturing and trading operations, between customers within PT Astra International Tbk (ASII)—Indonesia's largest automotive and diversified conglomerate—and third-party customers, as well as between four-wheel and two-wheel vehicle businesses. That balance helps cushion earnings against cyclical downturns in any single segment.

The brokerage acknowledged that the company still faces pressure from rising raw material costs, rupiah weakness, and higher production expenses.

Management has gradually passed through some cost increases to OEM customers since last year, particularly those related to aluminum, petroleum-based plastics, and U.S. dollar-denominated inputs, although pricing flexibility remains limited because of competitive pressures.

The company's trading business provides a stronger buffer.

CLSA estimates gross margins in the trading segment reach roughly 24%, compared with approximately 8% for manufacturing. Market-leading products such as GS Astra batteries command nearly 60% of Indonesia's replacement battery market, while the company's motorcycle tire business holds around a 10% market share.

Electric vehicles are also emerging as an increasingly important long-term growth driver.

Astra Otoparts has secured component supply contracts with several Chinese EV manufacturers, including BYD, Jaecoo, and VinFast, positioning the company to benefit from Indonesia's expanding EV manufacturing ecosystem.

The brokerage expects further upside from the government's plan to increase domestic content requirements for electric vehicles from 40% to 60% between 2027 and 2029, a policy designed to strengthen Indonesia's local supply chain.

Beyond manufacturing, Astra Otoparts is expanding its charging infrastructure business through its Astra Otopower network.

As of March 2026, the company had installed 65 ultra-fast charging stations across Indonesia and continues to expand its home charging solutions through its Altro wall charger while partnering with PT PLN (Persero), Indonesia's state-owned electricity utility, on pole-mounted charging infrastructure.

CLSA noted that while fully battery-electric vehicles still represent a relatively small share of Astra Otoparts' business, hybrid vehicles are becoming a meaningful growth contributor.

Models including Toyota's Kijang Innova Zenix Hybrid, Yaris Cross Hybrid, and Veloz Hybrid, along with Suzuki's Fronx, are generating increasing demand for locally produced components.

In line with parent company Astra International's focus on shareholder returns, Astra Otoparts has also increased its dividend payout ratio from 45% to 50% while remaining open to strategic mergers and acquisitions that complement its core automotive business.

Market consensus forecasts revenue growth of 4.8% and net profit growth of 7.6% in 2026.

At its current share price of Rp2,390, AUTO trades at approximately 4.9 times forward earnings while offering a dividend yield of around 9%, levels CLSA believes leave considerable room for upside even as Indonesia's broader automotive market continues its gradual recovery.