Toyota Toots Its Horn Over Massive New W. Java Plant

Jakarta Globe, Faisal Maliki Baskoro, September 13, 2011

Toyota chief executive Akio Toyoda arrived in style in Jakarta on Tuesday,
posing beside an orange 1977 Toyota Kijang, a popular model during the
company’s four decades in Indonesia. (AP Photo/Achmad Ibrahim)    

          

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Toyota’s supply chain may have been hit by the impact of the March tsunami in its home country of Japan, but the automotive maker is pushing ahead with expansion plans abroad, including in Indonesia.

Visiting the archipelago to mark 40 years of Toyota’s presence here, Akio Toyoda, the company’s chief executive, formally announced its plan to build a second plant in West Java.

Toyoda met Indonesia’s president and vice president on Tuesday, as well as an Industry Ministry official, to provide details of Toyota’s Indonesia plans.

“Our expansion plan shows our commitment to Indonesia,” Toyoda said, after briefly driving an orange 1977 Toyota Kijang, once the company’s most popular model.

Toyoda said Indonesia had become a focus of investor attention and a leader among developing nations as economies in Japan and Europe were clouded by economic crises.

Despite global production plans being disrupted by the March 11 earthquake and tsunami, Toyoda said that by June, Toyota had recovered “100 percent,” ahead of initial projections.

This was “thanks to the hard work and support of our people and thanks to the support from other countries like Indonesia,” he said.

Toyota announced it would build its second factory in a 76,000-square-meter facility next to its existing plant in Karawang, 60 kilometers east of Jakarta.

Toyota increased its investment to Rp 2.9 trillion ($336 million) from the Rp 1.7 trillion it committed in March in a sign of the growing automotive demand in Indonesia.

The factory is expected to be completed by 2013 and add 70,000 units of annual production capacity. Toyota is also keen to boost the local content of its cars and hopes the factory will generate 15,000 jobs.

Toyota expects to boost its exports from Indonesia, which last year represented 42 percent of its 107,000 unit output in the nation.

Toyota leads the market in Indonesia with a 37 percent share. Toyoda attributed that success to the Kijang, a family van.

“It’s the road that makes the car. Making cars that suit the characteristics of Indonesian roads is our way to catch our customer,’’ Toyoda said.

The Toyota Kijang has been sold in Indonesia for three decades. “Together with the Kijang Innova, these two models are our stars,” Toyoda said.

Johnny Darmawan, the president director of local distributor Toyota Astra Motor, said the trend in Indonesia was toward multipurpose vans to accommodate families, while there was also likely demand for a low-cost hatchback.

“We are also looking to export some of the cars produced in the new plant, but our priority is still satisfying the local demand,” he said.

Johnny said Toyota and the government were still in talks over tax incentives, but that infrastructure such as ports was more important.

Edwin Sebayang, the head of research at MNC Securities in Jakarta, said Indonesia’s growing economy and easy financing would drive car sales.

“It’s not surprising at all that automotive companies are posting high revenues with high margins,” he said.