Toyota-Astra to up local Kijang content
JAKARTA (JP): PT Toyota-Astra Motor pledged yesterday to accelerate its plan to increase the local content of its Kijang van in order to benefit from the newly-introduced luxury tax incentives.
"We are for sure heading that way (increasing local components) to qualify for the incentives," company spokesman D. Hendratmaka told The Jakarta Post here yesterday.
According to Government Regulation No. 36/1996, dated June 4, the government will lift the luxury goods tax on cars, station wagons, jeeps, minibuses, vans and pick-up trucks with engines of 1,600 cc or less, if they are produced in Indonesia and contain more than 60 percent of local components.
To speed up this increase of the Kijang's local components, Hendratmaka said, his company will soon talk to local component makers to make the needed components for the vans.
He said his company would not seek the relocation of auto- component vendors from Japan to support its Kijang because such relocation would take time, while his company wants to move fast.
The company's president, Rudyanto Hardjanto, said before the announcement of the new tax incentive that his company planned to increase the local content of its Kijang to 60 percent from the current level of 50 percent in the next three years.
Components
Hendratmaka said the main imported component for the Kijang is its transmission system, while other components such as the engines, bodies, chassis and plastic components are being produced locally.
Kijang is the most popular product of Toyota-Astra, a joint venture between PT Astra International of Indonesia and Toyota Motor Corp. of Japan.
Koji Hasegawa, a director of Toyota Motor Company, said here on Wednesday that Astra will work with PT Krakatau Steel, the Indonesian Plastic Association and local small- and medium-scale companies to produce the needed components.
He said Toyota Motor would not produce a 100-percent locally built vehicle because this would not be efficient. Instead, it will produce a "national" car using parts from Toyota suppliers elsewhere, mainly Malaysia and Thailand.
Last year, Toyota Astra-Motor sold 97,892 vehicles -- including some 70,000 Kijangs -- 25.26 percent of last year's total sales of 387,541 vehicles.
Kijang's dominance is however threatened by the impending introduction of the Timor car, classified a "national" car under the government's national car program, although it is actually going to be built in South Korea to begin with.
The Timor, to be produced by PT Timor Putra Nasional -- controlled by President Soeharto's youngest son Hutomo Mandala Putra -- in cooperation with Kia Motors Corp. of South Korea, will start entering Indonesia this month and be ready for sale to the public in September.
The Timor, exempt from import duty and luxury tax, will be sold at some Rp 35 million (US$14,870), less than Kijang vans.
Auto analysts have noted that the Timor will automatically steal market share from Japanese makes which have long dominated Indonesia's auto market.
The national car policy, announced in February, sparked vocal protest from Japanese car assemblers here and car makers in Japan, as well as the Japanese government.
Hendratmaka said he is confident that when the Kijang contains 60 percent local content and has been exempted from luxury tax, it will be able to compete with the Timor car.
"Of course we can compete with the Timor," Hendratmaka said, adding that Kijang prices will be cut by the 20 percent luxury tax, from its current prices of some Rp 40 million.
Kijang is categorized as a commercial vehicle. Thus, under the June 1993 deregulation package, the Kijang is already exempt from import duty on the remaining components. However, it is still subject to 20 percent luxury tax. (rid)