Japan's carmakers to stay in Indonesia despite slow market
JAKARTA (JP): Japan's automotive manufacturers have said that the future of the Indonesian car market remained bullish despite the current sluggish market.
Hiroyuki Nakamura, deputy general manager of Japan Automobile Manufacturers Associations, Inc (JAMA), said here Saturday that Indonesia's dormant car market would not last long.
He said Japanese-based companies remained confident about the future of Indonesia's auto market because the latter's economic downturn was caused by other noneconomic factors.
"Sales are down not because of the auto industry itself, it is political," he said, adding that Indonesia was a big market for Japanese cars.
Local carmakers in Indonesia have reportedly stopped all car production following an almost 80 percent domestic sales drop.
"The auto industry is facing a very tough period but I believe Japanese automakers have a very strong presence here and they will never pull out," Nakamura told The Jakarta Post.
Nakamura said the Japan-based parent companies would inject their operations here with fresh capital, providing loans or advance payment on car components they bought for assembly plants.
He said the Japanese car producers have arranged a number of approaches, such as shifting the market to overseas and improving the workers' productivity during the crisis.
Many companies, Nakamura said, would use the production slowdown to improve the technology and human resources of their local partners by providing extensive trainings for their workers.
Japan's auto industry and government have prepared a training course this year to improve productivity for at least 2,000 workers in Southeast Asian countries such as Indonesia, Thailand, Philippines and Malaysia.
Indonesian workers will make up 720 out of the total number.
Nakamura said Japanese-based carmakers would also raise exports of their completely built-up vehicles or auto part products from Indonesia to offset the sharp drop in the domestic sales.
The Indonesian-made Daihatsu Hijet van, which has been sold in China since 1996, is now exported to neighboring countries, he said, adding that the company planned to export in large volume.
Isuzu also planned to export its Indonesian-made cast parts and diesel engines to Japan, and its transmission cases to the Philippines, he said.
Kawasaki had already begun exporting its 110cc mopeds to Europe since last April, while Mitsubishi motors here had exported their sheet metal and machine parts for the Asia specialty car, the Dynamic family wagon, he said.
Nakamura said Indonesian exports of auto parts to Japan rose by 13.3 percent to 34.2 billion (US$237.5 million) year-on-year, in this year's first five months, from 30.2 billion.
He estimated that exports would be three fold by the end of the year, as sales to Japan usually improved after the summer season.
Asked if parent companies of Japanese-based carmakers would eventually buy out their local partners' shares while the companies' value were much lower currently, Nakamura said the auto industry in his country was based on cooperation.
"They're not money-oriented businesses. It's difficult to gain profit in a short term because they have a long-term view," he said
Japan has one of the world's strongest car manufacturing industries, with annual production reaching 10 million vehicles.
The country's carmakers with partnership operations in Indonesia are Daihatsu, Hino, Honda, Isuzu, Mazda, Mitsubishi, Nissan and Nissan Diesel, Suzuki and Toyota.
Partnership are in the form of joint ventures, technical assistance and production contracts.
JAMA held a two-day conference last week in Kuala Lumpur, Malaysia, on the auto supporting industries in the Southeast Asia countries of Indonesia, Thailand, Philippines and Malaysia. (das)