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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.
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