Floods and political instability in Thailand, as well as the strong Japanese Yen are reshuffling the automobile business in southeast Asia.
Honda’s automobile manufacturing and sales joint venture in Indonesia today announced plans to build a new automobile plant with annual production capacity of 120,000 units. The plant will be located at the existing P.T. Honda Prospect Motor plant at Karawang Industrial Park in a suburb of Jakarta. Combined with the current capacity of 60,000 units for Jazz, Freed and CR-V models, HPM’s total annual production capacity will be 180,000 units.
The new Honda auto plant requires an investment of approximately 3.1 trillion Indonesian rupiah or ~$338 million. It will open in 2014; with employment will be approximately 2,000. HPM is planning to produce small-sized vehicles such as the Brio developed for Asian markets Honda said further increases to its production capacity and product lineup in Indonesia would be forthcoming. ASEAN lowered tariffs and other trade barriers last year, making shipping among the bloc easier and less expensive.
As part of the move by Japanese automakers away from the strong Yen and the problems its poses for exports out of Japan, HPM will increase local product planning and engineering, as well as up local content to approximately 80% from the current level of 50%.
Japanese makes, led by Toyota & Daihatsu control 93% of the market in Indonesia thanks to their early – 1970s – entry there. GM, Ford and Chrysler have less than 3%. The balance goes to the Europeans (luxury cars) and the Korean automakers that are just ramping up.
Car sales in Southeast Asia are expected to rise from 2.2 million units in 2011. Some projections have them increasing to 2.7 million vehicles annually by 2015. Indonesian sales could surpass 900,000 vehicles this year, thereby making the archipelago the largest and fastest-growing market among the ASEAN trading block, according to auto analyst Michael Dunne who lives in Jakarta.
HPM will begin importing Brio from Thailand this year, and then begin local production of an Indonesian version of the model at the existing plant before the end of 2013. HPM is planning to transfer production of BRIO to the new plant when it becomes operational in 2014.
“Our operations in Indonesia will take the next step to become more autonomous and play an even more important role for Honda in this region. Honda will not only build automobiles in Indonesia to meet the needs of customers here. Indonesia will serve as a key export base for Honda – for both completed vehicles and components,” said Hiroshi Kobayashi / Managing Officer and Chief Operating Officer for Regional Operations (Asia & Oceania) of Honda Motor Company.
Honda is also a force in the Asian motorcycle market. PT Astra Honda Motor, Honda’s joint venture company in Indonesia responsible for motorcycle production and sales, is now going to build its fourth Motorcycle Plant in Indonesia. Total production capacity with the addition of 1,100,000 annual production will be 5,300,000 motorcycles and scooters when the plant opens next year.
General Motors announced last year that it would invest $150 million to reactivate its Bekasi manufacturing facility in West Java, Indonesia. The plant, closed in the middle of the last decade, will begin production of a new line of “people movers” for Southeast Asia in 2013.
See also:
- GM Rethinks ASEAN Strategy. Invests $150 M in Indonesia,
- Toyota Loses ¥33 Billion in First Half FY 2012. Scraps Forecast
