Friday, September 20, 2013
Indonesia Takes Stage As Auto Market, Production Site
TOKYO (Nikkei)--Japanese automakers used the Indonesia International Motor Show that opened on Thursday to unveil small, fuel-efficient vehicles designed to solidify their dominance of the Southeast Asian nation's car market.
Suzuki Motor Corp. (7269) officially announced that day its plans to build a 93 billion yen factory in an industrial park near Jakarta.
Japanese firms control 90% of the Indonesian car market, where three-row, seven-passenger minivans account for roughly 60% of passenger vehicle sales. But now, the government has introduced tax breaks to encourage the introduction of small, fuel-efficient cars at prices accessible to low- and middle-income people.
The Japanese automakers are acting now to qualify for the tax breaks and prepare for increased competition from the U.S. and Europe.
Suzuki's new factory, slated to begin operations in February 2014, will boost local production capacity by about 70% to 250,000 cars a year. The decision to bolster capacity included possible future plans to use Indonesia as an export base, Executive Vice President Toshihiro Suzuki said.
At the motor show, the company unveiled the Karimun Wagon R, a 1-liter small passenger car based on its Wagon R minivehicle. The model could hit the market as early as next month.
Honda Motor Co. (7267) showed off the Brio Satya, a small car due out in November that also qualifies for the Indonesian tax breaks. The firm also revealed plans to enter Indonesia's small-minivan market, where President Takanobu Ito said the automaker aims to quickly capture a 10% share.
Nissan Motor Co. (7201) is preparing two models under its Datsun emerging-market brand for Indonesian release in 2014.
To qualify for the tax breaks, a car must not only be inexpensive and fuel-efficient, but also contain 80% locally procured parts.
Some Western automakers, lacking production bases in Indonesia, did not unveil cars meeting these conditions. But Volkswagen AG is building a new factory there, while Ford Motor Co. says it is studying the situation.
(The Nikkei, Sept. 20 morning edition)