ASEAN KEY DESTINATIONS
Japan car makers expand in Indonesia on weak rupiah
THE rupiah’s descent to a 17-year low is building the case for Japanese auto makers to focus on rolling out cheaper, locally made sedans and multi-purpose vehicles (MPVs), rather than fighting for a bigger slice of Indonesia’s languid market for imported cars.
At just under 7,600 units, Indonesian car imports came in below 10,000 in February for the 11th consecutive month, the latest data from Indonesian auto association Gaikindo shows.
That’s less than 10 per cent of overall new car sales. Imported cars are losing their appeal as the rupiah plunges to its weakest against the dollar since the Asian financial crisis in the late 1990s and as Southeast Asia’s largest economy grows at a slacker pace.
The lacklustre import sales are a signal to overseas manufacturers such as Toyota Motor Corp, Nissan Motor Co Ltd and Mitsubishi Motors Corp to speed up their local expansion plans and sell cheaper models in a market they see as a pillar of their emerging market sales.
Japanese car manufacturers, facing a lack of growth at home, have big plans for Indonesia, which has surpassed Thailand as Southeast Asia’s largest auto market.
Japanese companies are betting on the long-term prospects in the world’s fourth-most populous nation and are willing to ride out what they see as a temporary slump in sales.
Monthly domestic sales, while off the highs of more than 100,000 units in the first half of 2014, are still twice the volume seen during the lows of the 2008 global crisis.
PT Honda Prospect Motor, the official distributor for Honda Motors Co Ltd in Indonesia, expects sales to fall in the first half of 2015, but will maintain monthly production of 14,000-15,000 in anticipation of a pick-up in the second half, Jonfis Fandy, marketing and after-sales service director, told Reuters.
Mitsubishi is spearheading a US$600 million investment in Indonesia.
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