TVS Motor Company, India's third largest motorcycle manufacturer, which has just built a plant here, is set to start selling its bikes on the Indonesian market in early 2007.
"Initial production at our current plant will start in December," TVS president director B.L.P. Simha said, referring to the US$43-million manufacturing plant in Kerawang, West Java, which is located on a 20-hectare plot of land.
With a production capacity of 300,000 units per year, Simha said that the company would focus first on motorcycles with small engine capacities, popularly known here as bebek.
"We have decided to launch these types of motorcycles as they are the ones used most commonly here by the people for their day-to-day activities," Simha said.
Figures from the Indonesian Motorcycle Association shows that sales of small-engined motorcycles accounted for 95 percent of overall sales between January and August, which stood at 2.6 million units. In 2004 and 2005, the equivalent figures were 92 percent of total sales of 3.8 million units and 90 percent of total sales of 5.07 million.
Simha said that the company was upbeat it would be able to make inroads into the tight Indonesian market, which is currently dominated by Japanese producers.
As of September this year, some 3.1 million motorcycles had been sold, with Honda holding a 51 percent market share, followed by Yamaha (32 percent), Suzuki (12 percent), and others (5 percent).
In 2005, total sales reached 5.07 million units.
To be able to compete with the Japanese giants, the company has built a network of 60 dealers offering service and spare parts throughout Indonesia, according to sales and marketing general manager K. Vijaya Kumar.
The company also revealed an investment plan worth US$100 million over three years to develop its research and development department so as to help boost local content to 80 percent from 40 percent at present.
"Local support is necessary for growth because it will significantly reduce production costs," Simha said, adding that TVS had decided to make Indonesia the supply hub for its products throughout Southeast Asia.
On Monday, the company also introduced its new board of commissioners, headed by Nihal Kaviratne, the former president director and CEO of PT Unilever Indonesia. Kuntoro Mangkusubroto, a former minister of energy and mining, who currently heads the Aceh-Nias Reconstruction and Rehabilitation Agency (BRR), and financial expert Rudjito are also among the members of the board.
TVS Motor Company is the flagship company of India's TVS Group, which is made up of 30 companies with total assets of $2.2 billion and 45,000 employees worldwide.
Beside TVS, another Indian motorcycle manufacturer, Bajaj, entered the Indonesian market in early November. (09)