Chinese automaker to set up plant in Indonesia
China's automotive company Great Wall Motors (GWM) plans to set up a car manufacturing plant in East Java in a joint venture with Indonesia's State-owned heavy equipment maker PT Bharata, according to a senior official at the Ministry of Industry and Trade.
Director General of Metal, Machinery, Electronics and Miscellaneous Industry Subagyo said on Wednesday that the venture would initially focus on manufacturing cheaper multipurpose vehicles (MPVs) with a price tag of below 100 million rupiah (US$10,793) per unit.
Subagyo said the value of the investment involved "trillions of rupiah", and that GWM expected to start the project at the end of this year.
"After entering the market with MPVs, they might launch pick-ups," he was quoted Thursday by The Jakarta Post as saying.
He said that a memorandum of understanding between the two companies was expected to be signed in August during a visit to China by Minister of Industry and Trade Rini MS Soewandi.
Subagyo said GWM might use Indonesia as its base for expansion to other Southeast Asian countries.
GWM is a holding company specializing in the manufacture of pick-up trucks in China, with an annual production of 100,000 units, and claiming to hold a more than 50 percent domestic market share. GWM exports 3,000 units annually to the Middle East, West Asia, North Africa and South America according to its website.
Industry analyst Suhari Sargo said that there was still ample room for new players to enter the domestic car market considering the relatively low ratio of car ownership in the country.
Suhari said the car ownership ratio in Indonesia was about one car for 35 people. In Malaysia, the ratio is 1-8, while in Thailand it is 1-15.
According to data from the Association of Indonesian Automotive Manufacturers (Gaikindo), new car sales reached 354,482 units last year, a 12 percent increase from the previous year's 217,763. Gaikindo targeted sales to reach 385,000 this year.