Indonesia’s O2O auto service platform Otoklix has gone from 100 to more than 2,000 partnering workshops. With quick progress, the startup is on a growth trajectory to become the largest and most trusted automotive aftermarket service network in Indonesia — Southeast Asia’s largest market with a projected 20 million vehicles on its roads daily in the next five years.
On a recent episode of Indonesia Digital Deconstructed, Adrian Li of AC Ventures was joined by Otoklix co-founder and CEO Martin Reyhan. Martin spoke about how it all started, where it’s going, and more.
Lubricating Indonesia’s auto service market by solving real problems
The transcript below has been condensed and edited for focus and clarity.
Adrian: Why did you choose the auto service industry and what led to the launch of Otoklix?
Martin: In high school, I had a red Honda Jazz. I had to practically change every single part to keep this car running. I faced various pain points like getting scammed with fake parts and being severely price gouged for components. Then, after university, I joined a consulting firm, where I gained exposure to the local tech industry. I was so enthralled by the enormity of technology and what startups were doing here. As I did more research, I realized that the omnichannel concept was scaling across different industries but I couldn’t find one for automotive. Hence, I chose this industry and started building Otoklix to address the issues I knew existed.
Adrian: How did you find like-minded people to help realize this vision?
Martin: Having a team you can rely on is arguably the most important aspect of any business. I was lucky because I found my co-founder in the form of a childhood friend. I knew he shared my passion for entrepreneurship. Joseph introduced me to his friend Benny Sutedjo who came in with 20-plus years of automotive experience and was already quite familiar with the industry. He, too, instantly saw the potential of Otoklix.
Adrian: The auto service space in Indonesia is estimated to reach over US$21 billion with over 16 million cars on the road daily. This is a gigantic opportunity. What went through your mind as you started to break it down?
Martin: First of all, just to clarify, that US$21 billion market size is actually a combination of cars, motorcycles, and big trucks. Cars represent about 40% of the auto service sector.
I visited a lot of workshops to gain insights and came to realize that there are two main challenges: servicing and spare parts. When it comes to servicing, most car owners are not automotive savvy, so they don’t know what’s wrong with their cars and tend to get defrauded a lot. Secondly, the majority of the prices in the independent workshops have no standardization whatsoever. As such, most of the invoices come with hidden fees, and finally, there is a lot of unprofessionalism in the service at a lot of these independent workshops.
If we dive deeper, we realize that 80% of auto service actually relies on some sort of spare part, whether it’s lubricants, tires, belts, batteries, etc.
We can see that the spare parts side of things is also fundamental to solving the market problem and there are three main hurdles:
- There are multiple intermediaries in the value chain. This leads to expensive part sourcing for the workshops, therefore, higher costs for consumers.
- Around 50% of the genuine parts that you see in the market are actually fake. Customers don’t know about that and workshops don’t care, as long as they get extra margins.
- There is high unpredictability in terms of demand.
So, when we started off, our main focus was on solving the spare parts side of things. The model eventually evolved and we went beyond procurement to becoming a full-blown platform for car owners to locate the closest workshop.
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