Japanese automaker Mitsubishi Motors Corporation began Tuesday the construction of a ¥60 billion (US$502.43 million) plant in Cikarang, West Java, that will cater to surging demand in the domestic market as well as the regional ASEAN market.
The plant, which will be situated on a 30-hectare plot of land in the Greenland International Industrial Center (GIIC), will have a production capacity of 160,000 passenger vehicles comprising small multi-purpose vehicles (MPVs), sport-utility vehicle (SUV) Pajero and L300 pick-up trucks once operations commence in April 2017.
Osamu Masuko, chairman of the board and CEO of Mitsubishi, said the plant would help the firm tap into the enormous opportunities provided by the rapidly expanding market of ASEAN, and in particular, in Indonesia, which has a market of more than 250 million people.
Masuko said demand in Indonesia would soon reach the level of Brazil, where 3 million automobiles were sold annually.
“Now it’s only 1 million. Three times the current market size is possible, I believe,” he said during a press conference.
The Indonesian Automotive Manufacturers (Gaikindo) has anticipated that full-year four-wheeler sales in 2015 would rise slightly by some 2 percent to 8 million units from the 7.87 million units sold in 2014.
However, car sales, a key indicator of consumption in Southeast Asia’s largest economy, plunged for two consecutive months in January and February, by 9.14 percent to 94,139 units and by 20.64 percent to 88,738 units, respectively, partly driven by depreciation of the local currency.
The new plant will be the second facility owned by Mitsubishi, which partners in Indonesia with PT Krama Yudha Tiga Berlian Motors. Located in Pulogadung, East Jakarta, Mitsubishi’s first plant has produced some 867,000 vehicles, consisting of pick-up trucks and Outlander Sport SUVs.
Masuko said the highest proportion of automobiles manufactured in the new plant would be MPVs at around 80,000 units.
“We will start with production of the Pajero Sport in April 2017, followed by the MPVs in August and the L300s in the following year,” he explained.
At present, the MPV segment dominates around 30 percent of the Indonesian car market. In the segment, Mitsubishi currently sells the Mitsubishi Delica.
Takeshi Ando, the head officer at production group headquarters, said Mitsubishi would develop a new seven-seat MPV to be produced at the new plant.
“The small MPV will be introduced for the first time in the world in Indonesia and will be exported to various countries in ASEAN starting in 2018,” Ando said.
The presence of the new model will heighten competition in a segment featuring the Toyota Avanza, Daihatsu Xenia, Suzuki Ertiga, and Honda Mobilio.
Catching up with Thailand, Indonesia is on its way to serving as a manufacturing hub for major automakers, supplying a wide range of models from low-cost green cars to SUVs to dozens of destinations, including Japan.
Masuko said Mitsubishi would strive to sell 20,000 MPVs in the ASEAN market and later expand to markets outside ASEAN like Africa, South America and the Middle East.
“By 2019 we will have a chance to export 40,000 to 50,000 units, and as we gain popularity, we might expand our production capacity [in the new plant] to 240,000 units,” he said. (Linda Yulisman, The Jakarta Post)