Honda Builds Second Plant in Indonesia image

Honda plans to boost production from 60,000 units annually to 180,000 by adding a new plant in Karawang, West Java, Jakarta, Indonesia.

On Monday, June 4th, Honda Prospect Motor began construction of the second plant in order to expand Indonesia’s low-cost car market. Until now the company invested Rp 3.1 trillion ($329 million) in this plant which is expected to begin production in 2014.

Chief executive officer of Honda Motor, Takanobu Ito, owns 51% of Honda Prospect Motor, and said that the plant will produce cars under Honda’s flagship, such as CR-V, Freed and Jazz, but also low-cost models accounting for the majority of Indonesia car sales. Later this month Honda will introduce to Thailand the five-seat Brio, with a price under Rp 200 million. When production starts at this new plant, Honda also aims at producing a seven-seat version of this model.

Ito said, “With the automotive market growing and conducive economic conditions, this country holds big potential for the automotive industry.”

In 2011 Indonesia bought a record 894,180 cars, up 17% from 2010, but this year is expected to fall 5%. Nevertheless, Indonesia is expected to overtake Thailand as the biggest auto market in Southeast Asia.