Nissan to Double Car Production in Indonesia by 2013

Bloomberg, By Aloysius Unditu and Yoga Rusmana, June 29, 2010, 3:37 AM EDT

June 29 (Bloomberg) -- Nissan Motor Co., Japan’s third largest automaker, plans to invest $20 million at a plant in Indonesia to double production in the country as economic growth spurs demand for cars.

The investment will allow Nissan to double capacity in Indonesia to 100,000 vehicles a year by 2013, the company said in a statement today. Sales that year may more than quadruple to 90,000 vehicles from 21,440 in 2009, it said.

“We are going to invest a lot in Indonesia,” Nissan’s Chief Executive Officer Carlos Ghosn said at a press conference in Jakarta today. “I am personally very optimistic about the prospects of the economy and the car industry in Indonesia.”

Nissan is also considering Indonesia as an export base, Ghosn said. The company will establish a research and development center in the country next year for market research, vehicle assessment and quality control, the statement said.

Widening labor unrest has forced auto parts makers to raise wages in China, increasing production costs for Nissan, Toyota Motor Corp. and Honda Motor Co. A shrinking supply of low-cost labor in the world’s largest auto market is increasing workers’ bargaining power.

Nissan fell 1.9 percent to close at 629 yen today in Tokyo trading, compared with a 1.3 percent drop in the benchmark Nikkei 225 Stock Average. The stock declined for a sixth straight day, the longest streak since November.

--Editors: Terje Langeland, Ian Rowley

To contact the reporter on this story: Aloysius Unditu in Jakarta at aunditu@bloomberg.net; Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

To contact the editor responsible for this story: Greg Ahlstrand at gahlstrand@bloomberg.net