Honda to build new factory in Indonesia image

Honda Motor Co. said on Thursday it would spend about 3.1 trillion rupiah ($337 million) to build a new car factory in Indonesia.

The Japanese automaker plans to triple its local output capacity to better meet demand in the fast-growing country and other Asian markets.

The new plant is scheduled to become operational in 2014, and initial employment will be approximately 2,000 associates.

“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,” said Hiroshi Kobayashi, chief operating officer in Asia and Oceania.

“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.”

The announcement comes days after Honda said it will build a scooter factory in Indonesia, which will boost its capacity in the world’s third-biggest two-wheeler market by a quarter to 5.3 million motorcycles a year.

Japanese manufacturers are increasingly looking to expand abroad, hammered at home by a shrinking, greying market and assailed in their export divisions by a strong yen.

New car sales in Indonesia rose 17% to 894,180 units in 2011, according to Indonesia’s car manufacturing association Gaikindo.