Astra, Honda Motors set up joint venture
Astra, Honda Motors set up joint venture
JAKARTA (JP): Publicly listed PT Astra International and
Japan-based Honda Motors Corp. Ltd. announced on Wednesday the
establishment of a joint venture in a bid to boost the two
companies' motorcycle production.
Speaking at a media conference, Astra president Theodore
Permadi Rachmat said the two companies' existing joint ventures
-- PT Honda Federal and PT Federal Motor -- would be merged into
the new joint venture, called PT Astra Honda Motor.
"(The joint venture) will integrate the two organizations'
existing motorcycle operations in Indonesia and will start
operating by January 2001," Rachmat said.
Honda Motor president Hiroyuki Yoshino said he expected the
new joint venture would be developed as a production base for
Honda motorcycles to be sold in the region.
"With the integration of our motorcycle operations in
Indonesia, we aim to enhance our competitiveness through closer
coordination with the Honda network in the ASEAN region," he
said. ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam
According to him, Indonesia will regain its position as the
world's third largest motorcycle market.
Data from Astra shows Indonesia's domestic sales of motorcycle
this year recorded the most rapid growth in ASEAN.
As of July total motorcycle sales in Indonesia reached 431,000
units, an increase of over 101 percent over the same period last
year. Honda motorcycles made up 54.1 percent of these sales, or
some 233,000 units.
Yoshino said his company had dominated the Indonesian
motorcycle market for years, with a market share of about 50
percent.
Honda Motor senior managing director Katsuro Suzuki said the
company would spend about Rp 1.28 trillion to increase its stake
in the new joint venture.
He said the company currently owns a 55 percent stake in Honda
Federal, which produces spare parts for Honda motorcycles.
The remaining 45 percent is owned by Federal Motor, Honda's
assembly and distribution company.
Astra owns 92.5 percent of Federal Motor, with the remaining
7.5 percent owned by PT Prakarti Yoga.
Under the deal, Astra sold a 42.5 percent share in PT Federal
Motor to Honda, Rachmat said. Honda will pay Rp 1.28 trillion, of
which Rp 1.12 trillion will go to Astra and the remainder to
Prakarti Yoga, which holds 7.5 percent of Federal Motor, Rachmat
said.
Astra will use the funds to pay its debts, which currently
total around US$1 billion.
Suzuki said Honda Federal's assets were too small compared to
Federal Motors, so that in order to become equal partners in the
new joint venture, Honda Motors must invest another Rp 1.28
trillion. (bkm)