Japanese automakers expand in Indonesia as local currency falls image

The country’s rupiah fall to a 17-year low has prompted the market leading Japanese automakers to expand their local production capabilities instead of fighting for a bigger market share in the dwindling import car segment.

The Asian automakers, which own a top position in Indonesia are increasingly focusing on introducing affordable, locally built sedans and multi-purpose vehicles as the 7,600 units-worth (per month) Indonesian import market continued to dip below the 10,000 vehicles threshold for the eleventh straight month in February, according to figures from Indonesian auto association Gaikindo. That would put the sector below the 10 percent mark for the overall auto market in the country. The biggest economy in Southeast Asia is growing at a continuously slower pace and imported autos have lost their appeal as the country’s currency has reached its lowest level against the dollar since the Asian financial crisis in the late 1990s.

The diminishing import market has pushed global powerhouses such as Toyota, Nissan and Mitsubishi to pursue new local expansion investments – the market is seen key to their growing emerging market ambitions. Japanese carmakers, now seeing a crumbling internal market, have refocused on Indonesia, which overtook Thailand as Southeast Asia’s biggest car market. The emerging market’s prospects are tremendous, if we just take into consideration the fact that Indonesia is the globe’s fourth-most populous nation. Mitsubishi is first in the game, with a $600 million investment used for a new assembly facility in the country with a future production capacity of 240,000 units.

Via Reuters