Japan otomotif market


Japanese dominance
Its continuous presence and long experience in sales and distribution help explain why Japanese auto giant Toyota has done so well in Indonesia. In February 2005, Toyota had a 31.7% market share with 13,899 vehicles sold, compared with 10,717 units sold the same period last year. It plans to increase annual production capacity of its Innovative International Multipurpose Vehicle (IMV), the Toyota Innova MPV, from 70,000 vehicles to around 100,000 vehicles by the end of this year. The expansion will set it back around $40 million. In 2006, Daihatsu will invest around $10 million to increase its annual production capacity for the hot seller Xenia/Avanza, jointly developed with Toyota, from 78,000 vehicles to 114,000 vehicles. The model sells as the Xenia under the Daihatsu brand and as the Avanza under the Toyota brand. Nissan plans to more than triple its annual capacity in Indonesia by 2007, from 12,000 units to 40,000, and plans to mass-produce a global car in Indonesia and other plants in Asia for markets in Asia, the Middle East and Central and South America. Figures released by PT Indomobil, one of the country's largest automobile distributors, show that sales of Nissan cars, only one of the 12 car brands marketed by Indomobil, accounted for 12.5% of the company's 96,000 vehicles sold last year.

Indomobil also distributes for Suzuki, whose cars accounted for 83% of total sales. PT Indomobil Suzuki International (ISI), Suzuki's Indonesian car manufacturing joint venture, last month launched the export campaign for its new APV multipurpose, compact minivan. The vehicle jointly developed by ISI and Suzuki went on sale in Indonesia in September 2004. Monthly domestic sales volumes have since averaged at around 2,400 units. There are plans to make Indonesia the production base for worldwide sales of the vehicle, according to Industry Minister Andung Nitimihardja.

South Korean's Hyundai and KIA are also considering setting up a production base in Southeast Asia to take advantage of AFTA, though there has been no confirmation yet that Indonesia has been shortlisted. Honda assembles the CR-V sports utility vehicle (SUV), Stream MPV and Jazz compact cars in Indonesia. The Stream is exported to Thailand. Similarly, BMW assembles most of its 3 Series and 5 Series sedans in Indonesia and exports the BMW 530i to Thailand.

Odd man out
It's easy to see why the car makers in Asia are optimistic. Emerging markets present the main opportunity for long-term car sales growth and will boost the global car market to over 60 million units by 2009. Prospects for car market growth in Asia are particularly positive and the Pacific Rim countries are forecast to make an additional 5 million units for the world market by 2009. China alone accounts for around 80% of that increase and annual car sales there are expected to top 6 million units by the end of the forecast period.

None of the member states has a market big enough to give the economies of scale needed to justify major manufacturing investments. But the complete liberalization of the region's automotive sector by the full-scale implementation of AFTA cranks up the stakes. ASEAN states have agreed to remove import duties altogether by 2010 for the five founding members of the grouping (Indonesia, Malaysia, the Philippines, Thailand and Singapore) and by 2015, for new members Brunei, Vietnam, Laos, Cambodia and Myanmar as well.

As trade barriers tumble and car makers shut down redundant plants to move production to where it can be done most profitably, the ASEAN market, with 10 countries and around 511 million consumers, becomes even more appealing. Ford has production facilities in Malaysia, Thailand, Vietnam and the Philippines but only has a distribution network in Indonesia. It focuses on sales and after-sales service. Ford (Thailand) exported 20,000 vehicles to 130 countries from the Kingdom, mainly as a result of the AFTA agreements.

Stephen Biegun, vice president of the Detroit-based auto giant's international government affairs division said, "We are betting on the ASEAN Free Trade Area model and also on trade relations among ASEAN nations. We are the biggest cheerleader for ASEAN economic integration because we are the biggest beneficiary," admitted Biegun. This will herald stiffer competition for existing players, but Indonesians who can afford a car will still have plenty of choice for a long time to come.