Chinese auto company to set up manufacturing plant in E. Java<\/p>\n
Zakki P. Hakim, Jakarta<\/p>\n
China's automotive company Great Wall Motors (GWM) plans to set
\nup a car manufacturing plant in East Java in a joint venture with
\nIndonesia's state-owned heavy equipment maker PT Bharata,
\naccording to a senior official at the Ministry of Industry and
\nTrade.<\/p>\n
Director General of Metal, Machinery, Electronics and
\nMiscellaneous Industry Subagyo told reporters on Wednesday that
\nthe venture would initially focus on manufacturing cheaper
\nmultipurpose vehicles (MPVs) with a price tag of below Rp 100
\nmillion (US$10,793) per unit.<\/p>\n
Subagyo said the value of the investment involved \"trillions
\nof rupiah\" (hundreds of millions of U.S. dollars), and that GWM
\nexpected to start the project at the end of this year.<\/p>\n
\"After entering the market with MPVs, they might launch pick-
\nups,\" he said.<\/p>\n
He said that a memorandum of understanding between the two
\ncompanies was expected to be signed in August during a visit to
\nChina by Minister of Industry and Trade Rini MS Soewandi.<\/p>\n
Subagyo said GWM might use Indonesia as its base for expansion
\nto other Southeast Asian countries.<\/p>\n
GWM is a holding company specializing in the manufacture of
\npick-up trucks in China, with an annual production of 100,000
\nunits, and claiming to hold a more than 50 percent domestic
\nmarket share. GWM exports 3,000 units annually to the Middle
\nEast, West Asia, North Africa and South America according to its
\nwebsite.<\/p>\n
Reports said that GWM also aims to penetrate the U.S. market
\nin around October by offering compact Sport Utility Vehicles
\n(SUVs) and pick-ups with appealing prices of between $9,000 to
\n$15,000 per unit.<\/p>\n
Industry analyst Suhari Sargo said that there was still ample
\nroom for new players to enter the domestic car market considering
\nthe relatively low ratio of car ownership in the country.<\/p>\n
\"So I believe the automotive business will keep growing,\"
\nSuhari said, adding that MPVs currently dominate about 70 percent
\nof the local car market share. A couple of Japanese carmakers
\nhere have already started selling cheaper MPVs with a price tag
\nof less than Rp 100 million per unit.<\/p>\n
Suhari said the car ownership ratio in Indonesia was about one
\ncar for 35 people. In Malaysia, the ratio is 1:8, while in
\nThailand it is 1:15.<\/p>\n
According to data from the Association of Indonesian
\nAutomotive Manufacturers (Gaikindo), new car sales reached
\n354,482 units last year, a 12 percent increase from the previous
\nyear's 217,763. Gaikindo targeted sales to reach 385,000 this
\nyear.<\/p>\n
Suhari also said that the Chinese carmaker could make a strong
\ndebut in the local market despite the fact that Chinese
\nmotorcycle makers had earlier failed to compete with their
\nJapanese rivals here.<\/p>\n
He pointed out that the Chinese automobile industry was far
\nmore advanced than the motorcycle industry.<\/p>\n
He added that the failure of Chinese motorcycles to penetrate
\nthe local market as also due to the fact that the bikes were
\nimported by general importers who lack the commitment to after-
\nsales service.<\/p>\n
\"Now, Chinese cars have competitive features compared to
\nestablished global brands,\" he said, while also acknowledging
\nthat the cars would still need some time and a strategy to gain
\nthe trust of the Indonesian people.<\/p>",
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