Japanese carmaker Mitsubishi Motors Corporation (MMC) said it was waiting for the Indonesian government to publish its detailed regulation for the so-called low cost, green car (LCGC) scheme, a top executive said recently.
MMC president director Osamu Masuko told a limited gathering on Thursday that Mitsubishi would have to study the detailed regulation before deciding to join the LCGC program by investing in more facilities in Indonesia.
“We will consider it if there is merit in the regulation,” he said.
“Nevertheless, Indonesia’s automotive market is huge with current demand for between 900,000 and 1 million cars per year.”
Osamu added that given the total population, natural resources and vast territory in Indonesia, potential demand could rise to between 2 and 3 million cars per year.
“The potential for growth in Indonesia is very strong,” he said.
“Therefore, we urge the government to expedite infrastructure development to support growth.”
Despite the fact that the government had yet to issue the detailed LCGC regulations, Osamu said its newly launched Mitsubishi Mirage subcompact car was being prepared by MMC to take part in the program, which aims to produce a car for under Rp 100 million (US$10,469).
According to the draft regulation, in order to be eligible for incentives in the LCGC scheme a car must have a maximum engine capacity of 1,200 cc, fuel efficiency of 22 kilometers per liter for those using a 1,000 cc engine and be sold for between Rp 80 million and Rp 90 million.
The cars should also be locally manufactured, using 40 percent of local components in the first year, 60 percent in the third year and 80 percent in the fifth year.
Cars with a 1,200 cc engine should have a fuel efficiency of 20 kilomeetrs per liter. There are no limits on local content as long as the regulation on 40 percent of ASEAN–wide content is met.
Osamu, who served in Indonesia in 1997-2005, said Mitsubishi might consider producing the Mirage in Indonesia once the detailed regulation was on the table.
“Currently, we are importing the Mirage [from Thailand]. We want to see the public’s response before producing it here,” he said. “There is always the possibility we may use the Mirage if it suits the LCGC requirements.”
PT Krama Yudha Tiga Berlian Motors (KTB), the authorized distributor of MMC passenger cars and commercial vehicles produced by Mitsubishi Fuso Truck and Bus Corporation (MFTBC), is expecting to sell 1,000 Mitsubishi Mirage every month.
KTB offers three models of Mirage: the GLX, the LGS and the Exceed, priced at Rp 165 million, Rp 152 million and Rp 139 millon, respectively.
Other carmakers have also offered their subcompact cars with specifications already close to the LCGC’s general requirements.
PT Honda Prospect Motor introduced the Honda Brio in August, while PT Nissan Motor Indonesia launched the Nissan March in 2011.
Meanwhile, PT Toyota Astra Motor, PT Astra Daihatsu Motor and PT Astra International are collaborating to launch the Astra Toyota Agya and the Astra Daihatsu Ayla on Wednesday.
As other car makers have expanded or built production facilities in Indonesia, Osamu said Mitsubishi did not feel they were being left behind.
“The most important thing before deciding upon a new investment is the size of the local market,” he said.
“Currently, we produce about 60,000 cars and import a further 20,000 to 30,000 cars.”
Osamu said MMC planned to expand its production capacity to 150,000 by 2015 to maintain its market share of 15-16 percent in Indonesia’s automotive market. (Novan Iman Santosa, The Jakarta Post)