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Toyota to shift Thai output base to Indonesia

County president cites strong demand, growing middle-class as production of all-new Vios starts in West Java plant

Toyota Motor Manufacturing Indonesia (TMMIN) has started producing its all-new Vios at the company's plant in Karawang, West Java, as it gradually moves its production base from Thailand to Indonesia.

The company, which usually imports the Vios compact sedan from Thailand, has spent 2.5 trillion rupiah (Bt6.7 billion) in initial capital on its expansion in Indonesia.

TMMIN president-director Masahiro Nonami said the persistently strong demand for cars in Indonesia, driven by its growing middle-class segment, had attracted his company to make the country a Vios production base.

"We see Indonesia as one of the most important markets for automotive products among other Southeast Asian countries," he told a press conference at the plant on Wednesday, the first day of the local production of the Vios.

"The Vios production base in Karawang can absorb some 500 workers to our plant," he said.

The company plans to produce 1,000 Vios sedans every month.

"Currently, we have approximately 100 auto-part suppliers, with local companies constituting some 20 per cent of the suppliers, while the remaining 80 per cent are made up of Japanese and joint-venture companies," he said.

Nonami said Toyota currently contributed 87 per cent to Indonesia's automotive sales figures and the company hoped to increase its contribution to 90 per cent with the local production of the Vios.

He added that thus far, his company had yet to determine whether to export the Vios from Indonesia, as it was still formulating strategies to increase its domestic sales figures.

Toyota seeks to shift its production base gradually from Thailand to Indonesia and hopes to complete the move some time next year.

The car manufacturer also plans to start producing the Toyota Yaris, which it also currently imports from Thailand, in Indonesia next year.

Toyota Motor Thailand sold 516,086 units in the Kingdom last year, or about 37 per cent of the country's total domestic car sales, The Nation has reported.

Toyota dominated the Indonesian auto market last year, with 405,414 units sold, or 36 per cent of total domestic car sales, according to data from the Association of Indonesian Automotive Manufacturers (Gaikindo). The sales figure was 30 per cent higher than the previous year.

"Although Indonesia is a very attractive market for automotive products, some problems in the country, such as traffic gridlock, high production costs and increasing minimum wages, need to be addressed to attract more automotive companies here," Nonami said.

He said Toyota might double or triple its annual car production in Indonesia if the country improves its infrastructure, for example, by improving port efficiency.


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