Suzuki to build new engine plant in Indonesia image

Suzuki Motor Corp., on Wednesday said it will build a new facility to produce engines in Indonesia as it seeks growth in the fast-expanding market dominated by the Toyota Motor Corp group.

The automaker will invest $780 million into the new plant that will triple engine-making capacity in Indonesia, Suzuki said in an e-mailed statement today, Bloomberg reports.

While the company remains committed to its home market, sluggish demand and intense competition has led it–and most other Japanese automakers–to seek growth abroad. The yen’s rise to record highs against the dollar has made exports from Japan less competitive, so Japan’s car makers are ramping up local production.

The announcement comes shortly after the Japanese automaker said it will start buying diesel engines from Fiat SpA’s. The agreement will help Suzuki to reduce the long waiting period on some of its best-selling models like the Swift.

Suzuki currently has two factories in Indonesia with capacity to build 1 million motorcycles and 80,000 cars a year. It said the newly purchased land could also be used to make more vehicles.

Fiat India, an equal joint venture between Fiat SpA and Tata Motors Ltd., can produce up to 300,000 diesel and gasoline engines a year at its factory in the western Indian town of Ranjangaon.