Timor car may cause cuts at Toyota's local plants

Timor car may cause cuts at Toyota's local plants

JAKARTA (JP): Top Japanese auto maker Toyota Motor Corp. said
in Tokyo yesterday that it is planning to cut production in
Indonesia due to Jakarta's national car policy.

Toyota officials in Jakarta, however, denied it by saying that
the company had not cut vehicle production and had no plans to
slash production in the near future.

Toyota Motor officials were quoted by AFP as saying that cuts
would be made at its joint venture, PT Toyota Astra Motor, which
has an output of 7,500 vehicles a month.

The Japanese economic daily, Nihon Keizai Shimbun, said in its
edition yesterday that Toyota has already started cutting
production of passenger cars and commercial vehicles in Indonesia
by more than 20 percent to 6,000 units a month.

The company's technical director, Adirizal Nizar, told The
Jakarta Post yesterday that his company's assembly plants are
running as usual and that it has no plans to slash its vehicle
production.

The venture, 51 percent held by PT Astra International and 49-
percent by Toyota Motor, is the country's largest vehicle
producer with a 26-percent share of the domestic market.

Its production in Indonesia has been rising steadily, with
output of 97,892 vehicles last year, up from about 80,000 in
1994.

Adirizal acknowledged, however, that his company's auto sales
dropped significantly during the first quarter of this year,
compared to the same period of last year. He declined to give
figures.

He said the slump was not very much driven by the new policy
but rather by the government's tight money policy and the recent
floods in the city, which have forced many people and companies
to put their car buying plans on hold.

According to the Indonesian Automotive Industry Association,
Astra International sold 15,277 units in January, 9,454 units in
February and 15,898 units in March.

In addition to Toyota vehicles, Astra International also
markets Daihatsu, Nissan and other Japanese vehicles. It also
sells BMW, Fiat and Peugeot.

National car

Many have suggested that Astra International's auto sales drop
last February was a result of the government's decision,
announced in the same month, to grant tax and tariff breaks to PT
Timor Putra Nasional, which has promised to develop a national
car, called Timor.

Teamed up with Kia Motors Corp. of South Korea, Timor Putra
plans to launch the Timor car in September and sell it at half
the price of Japanese cars.

"Car sales in Indonesia are slowing ahead of the launch of the
national car in September. We are very worried," a spokesman for
Honda Motor Co. Ltd. was quoted by Reuters as saying in Tokyo
yesterday.

"We think we will have to review our output and sales plans
for this year," he said, without elaborating.

Under its existing plan, Honda will make 10,000 cars this year
in Indonesia, up from 5,500 last year.

A number of parties have expressed concern that the new
automotive policy will discourage existing car firms from
expanding their production capacities.

"I think further expansion in production will be difficult for
a foreign maker," a spokesman at Nissan Motor Co. Ltd. said in
Tokyo.

However, Nissan is maintaining its plan to boost production
capacity in Indonesia to 12,000 cars a year from 7,200 a year
after the opening of a new plant in October, the spokesman said.

Toyota officials in Tokyo also said that Toyota is sticking to
its plan to open a new plant in Indonesia in 1998, to increase
Toyota Astra Motor's total annual output to 200,000.

George T. Pattian, a spokesman for Toyota Astra has also
denied Tokyo reports that the company had sacked 1,000 of its
5,000 employees. He did clarify that the company planned to end
the employment of 120 of its 1,000 contract workers.

"But this has nothing to do with the Timor car launching,"
Pattian said.

The Japanese government has argued that Jakarta's policy
breaches World Trade Organisation (WTO) rules. However, Jakarta
said it had studied WTO regulations before announcing the policy.
(rid)