Officials at Japan’s Suzuki and Nissan cited the future government incentives as an impetus for growth, while South Korea’s Hyundai Motors cited the improving economic environment for its optimism in Indonesia.
“Indonesia is so hot for the auto industry because the economy is growing significantly,” said Jongkie Sugiarto, president director of Hyundai’s Indonesian unit.
The strength of Indonesia’s economy, lower interest rates and government initiatives revive memories of Japan’s emergence in the automobile industry half a century ago, Credit Suisse Group AG analyst Kunihiko Shiohara wrote in a report this week. Japanese carmakers increased production more than six-fold in the 1960s, accounting for an estimated 18 percent of global production by 1970 from less than 3 percent a decade earlier.
As more global carmakers deepen their interests in Southeast Asia, Japanese carmakers are aiming to defend their lead.
Toyota, which offers the nation’s best-selling Avanza minivan, is planning 1.3 trillion rupiah ($144 million) in investments in Indonesia to boost production, said Joko Trisanyoto, a marketing director for Toyota’s venture in the country. The company operates two factories in the country that can produce as many as 110,000 units a year.
Suzuki on Jan. 4 said it would invest 60 billion yen ($780 million) on increasing capacity in Indonesia, including setting up a new factory to build engines. In 2010, Nissan said it was investing more than $20 million at a plant in Indonesia to double annual capacity in the country to 100,000 vehicles by 2013.
“Indonesia is seen as a sexy market,” Suzuki’s Tuilan said. “More investors are coming to Indonesia. That may stimulate the economy and market growth.”