SINGAPORE/JAKARTA Nov 22 French car maker
Renault SA (RENA.PA) is looking at starting production in
Indonesia, while other car manufacturers plan to step up their
existing operations, a government official told Reuters.
Indonesia is keen to compete with Thailand as the region's
centre for car production, catering to a regional market of
about half a billion increasingly affluent consumers.
Investment by the world's top auto manufacturers would help
create new jobs and spur growth in Indonesia's economy, which
is set to expand 6.3 percent this year, the fastest pace in 11
A government official, who declined to be named, told
Reuters that Renault has short-listed Indonesia and one other
country as potential sites for new production facilities.
In addition, Japan's Toyota Motor Corp (7203.T) plans to
increase production in Indonesia, the official said.
Earlier this month, another Japanese manufacturer, Daihatsu
Motor Co 7262.T, said it had invested about $130 million to
increase the annual capacity of its existing plant in Jakarta
by more than 40 percent in order to meet growing domestic
demand and produce for the export market.
Renault plans to invest $600 million in a new factory with
the capacity to produce 150,000-200,000 vehicles a year for the
domestic and export markets, according to Bisnis Indonesia
newspaper, quoting Indonesia's investment coordinating board,
Renault set up dealerships in Indonesia several years ago,
but its sales volume is low as its products are more expensive
than those of its Japanese rivals, which have production bases
in Southeast Asia's largest economy.
Last year, Renault sold only 19 vehicles, a tiny fraction
of the total 318,883 units sold in Indonesia, according to
industry data. Renault's alliance partner Nissan Motor Co
(7201.T) has a stronger presence, with a market share of around
Japanese car makers including Toyota (7203.T) -- which
makes the Kijang, Indonesia's most popular car -- as well as
Nissan, Honda (7267.T), Daihatsu, Mitsubishi (7211.T), and
Suzuki (7269.T) have dominated Indonesia's automotive industry
with a total market share of nearly 90 percent.
Car sales are rebounding this year after a reduction in
fuel subsidies in 2005 led to higher fuel costs for consumers
and prompted a sharp drop in car sales in 2006.
Thanks to a steady decline in interest rates over the past
18 months, domestic consumption has picked up. Vehicle sales
are expected to top 400,000 units this year, and next year are
forecast to exceed the record set in 2005 of 533,910 units.
(Editing by Sara Webb)