May 8, 2014 / 9:26 AM / 3 years ago

UPDATE 1-Nissan optimistic about Indonesia's auto market despite economic worries

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By Fransiska Nangoy

JAKARTA, May 8 (Reuters) - Japan's Nissan Motor Co, shrugging off the prospect of a further slowdown in the Indonesian economy, said on Thursday it plans to significantly expand its sales network and aims to boost sales by 55 percent in the fiscal year ending March 2015.

Nissan said its sales volumes in Indonesia will start to recover this year due to a just-launched line of no-frills cars that qualify for certain tax breaks. Its volumes in Indonesia fell 14 percent in the last fiscal year ended March 31.

Toru Hasegawa, head of PT Nissan Motor Indonesia, told a small group of reporters on Thursday at a Nissan factory complex near Jakarta that the company aims to sell 90,000 vehicles in Indonesia this fiscal year, up from the 58,066 vehicles sold in the year ended March 31.

Nissan will try to boost sales on the back of the new line of affordable cars to be marketed under the resurrected Datsun brand name, as well as by expanding its dealership network to 95 outlets for Datsun by the end of this fiscal year from the current 39 outlets.

For the Nissan brand, the company currently has about 100 dealership outlets, which Nissan said will number 130 outlets by the end of the fiscal year.

"Indonesia is a very promising market," Hasegawa told reporters, pointing to the rise of middle-class buyers and a relatively lower penetration of cars in the country.

"There is only 70 car ownership for every 1,000 population" in Indonesia, which Hasegawa compared to Thailand's ratio of 150 cars per every 1,000 people and Malaysia's 250 cars.

"Sometimes, of course, there is turbulence, but in the mid to long term it's very promising. The economy is very strong and political situation is stable, so we are quite confident," Hasegawa said referring to Indonesia.

Southeast Asia's largest economy reported 5.2 percent growth for the January to March quarter, lower than the estimated 5.6 percent expansion.

Nissan, which officially opened a second Indonesia assembly plant in Purwakarta, a town southeast of Jakarta, with eventual capacity to manufacture 150,000 vehicles a year, recently began producing at the new plant a Datsun model called GO+Panca. Company officials said Nissan began taking orders on Thursday, and that dealers plan to begin delivering the car in June.

The company said the Datsun GO+Panca will start at 85 million rupiah, or about $7,300.

In the first two years of Datsun's launch, Nissan expects to sell 40,000 Datsun cars in Indonesia, according to the company.

Nissan officials have said it is optimistic about the future of the Datsun brand because the Indonesian government appears poised to continue to provide policy support to ignite demand for affordable cars, chiefly through a program called "low-cost green cars" (LCGC) where the government is providing tax breaks for cars with high local content and fuel efficiency.

Hasegawa said Nissan estimates LCGC cars on the whole to make up 15 percent to 20 percent of total car sales this year in Indonesia. Gaikindo, an Indonesian association of automakers and other companies operating in the automotive industry, estimates the market to generate 1.2 million cars in sales for calendar year 2014.

Nissan is currently investing 33 billion yen in Indonesia to boost the company's annual manufacturing capacity to 250,000 vehicles a year from the current 100,000 vehicles. (Reporting By Fransiska Nangoy in JAKARTA and Norihiko Shirouzu in BEIJING; Editing by Ryan Woo)

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