Japan Daihatsu mulls increasing Indonesia capacity

Reuters / Yahoo Finance - 2007-04-20 10:46

JAKARTA, April 19, 2007 (Reuters) - Japanese minivehicle and small car maker Daihatsu Motor Co. is considering increasing its capacity in Indonesia to meet growing demand, a company official said.

Daihatsu has thee capacity to produce around 9,600 units per month, but has had to increase shifts and working hours to boost monthly output to 13,000 units to meet strong demand.

Daihatsu has introduced a number of fuel-efficient models in Indonesia such as the Xenia mini van and Terios small SUV, which have become increasingly popular since a big fuel price hike in October 2005.

"Currently, we are still able to meet the demand, but if in the future we see more demand we will match this additional demand," Shigeharu Toda, general manager for the Asia division of Daihatsu, told Reuters.

He did not provide more details.

Last year, a company executive who declined to be named told Reuters the firm planned to increase capacity in Indonesia to 270,000 units a year by 2010.

Its market share in the world's fourth most populous nation grew to 10.4 percent in 2006 from 9.1 percent a year before.

Indonesia's vehicle sales declined by around 40 percent last year as the sector was hit by high interest rates and crumbling purchasing power following the October 2005 fuel price hike.

Vehicle sales fell to 318,883 units in 2006 from a historic high of 533,910 units in 2005. But some analysts and experts predict volumes may recover to 350,000-400,000 units this year and return to 2005 levels next year.