Nissan, Japan’s third-largest automaker, believes Indonesia has the potential to become an export base as the company moves production from Japan to counter a strong yen.
Nissan is investing more than $20 million at a plant in Indonesia to double capacity in the country to 100,000 vehicles a year by 2013, the company has said.
While Nissan needs the capacity to meet rising demand in Indonesia, favorable government policies may also make the country attractive for exports, said Toru Hasegawa, an executive in charge of Nissan’s Asian operations outside of Japan and China.
“We need to be thinking about the next step of Nissan’s globalization,” Hasegawa said. “Indonesia has a very high quality work force” and “very low labor costs,” he noted.
Japanese carmakers are shifting production from domestic plants as the yen gains against the dollar and euro, making exports from Japan less profitable. The yen was at 83.69 against the dollar on Sunday after climbing to 83.35 on Saturday, the strongest since May 1995.
In Indonesia, Nissan may benefit from a proposed lower tax for fuel-efficient cars that may encourage production in the nation, Hasegawa said.
Nissan recently moved production of its small-size March model out of Japan due in part to the nation’s rising currency. The automaker this year began making the compact in Thailand for export to Japan and may further expand capacity at its operations there, Hasegawa said.
The carmaker trails rivals Toyota and Daihatsu in production capacity in Indonesia. Toyota can build about 100,000 units a year in the country, and it exported about 10,000 Innova minivans and Fortuner sport-utility vehicles to other markets in Southeast Asia and to the Middle East in 2009.
Like Nissan, Toyota is shifting output to other countries, particularly emerging markets, and aims to cut production capacity in Japan by about 20 percent within five years.
Daihatsu, which in January said it would make Indonesia its center for exports, has capacity to build about 210,000 units annually in Indonesia and shipped about 12,000 cars last year to countries including Japan, Saudi Arabia and South Africa.