Automotive Manufacturing Industry: Indonesia's Car Production Center

The area of Bekasi-Karawang is a strategic location for car manufacturers as it is conveniently located near Indonesia's capital city of Jakarta where car demand is highest. Although infrastructure development in Indonesia is generally insufficient, there exists good access from the Bekasi-Karawang area to Jakarta through a toll road. Access to Jakarta is also important for exports from Tanjung Priok. The port of Tanjung Priok in North Jakarta is the busiest and most advanced Indonesian seaport, handling more than 50 percent of Indonesia's trans-shipment cargo traffic.

In the future exporting will be made easier for those businesses in the Bekasi-Karawang area. A new port, the Patimban Seaport, will be constructed in Subang (West Java). through Presidential Decree No. 47/2016, signed by Indonesian President Joko Widodo, the government declared this project a national strategic project, implying that all ministers, government agencies and governors need to support its development. The Patimban seaport is envisaged to become an international seaport with a 7.5 million twenty-foot equivalent units (TEU) capacity.

Currently, there are five established automotive manufacturers with assembly plants in the Bekasi-Karawang area. Combined, these five carmakers have an annual production capacity of one million vehicles. Two other companies are currently establishing their factories in this area and are expected to become operational by 2017 (adding a total of 280,000 vehicles to annual production capacity). Meanwhile, the Bekasi-Karawang area also houses six motorcycle manufacturers that can produce a total of 7.2 million motorcycle units per year.

Jonfis Fandy, Marketing and After Sales Services Director at Honda Prospect Motor (HPM), said his company owns a IDR 3.1 trillion (approx. USD $233 million) car factory in Karawang. Moreover, HPM has invested IDR 500 billion for component manufacturing facilities in Karawang (covering engine test stands, crankshaft and connecting rods). Currently, HPM's car factory can produce up to 120,000 units per year. This figure is expected to rise to 200,000 in 2017 amid the company's expansion plans. The carmaker produces the popular low multipurpose vehicle (MPV).

The MPV is the most popular car in Indonesia. Indonesians love this model, known as "people carriers", as these vehicles are bigger than the family car. Indonesians enjoy taking trips with the family (and/or friends) and therefore a big car is required. The MPV can carry up to seven passengers and, thus, meets this request. The MPV that is manufactured by HPM has a high degree of local content. Approximately 86 percent of the cars' materials are sourced domestically.

Automotive Factories in Indonesia:

Location	Company	Production Capacity
Karawang	Toyota Motor Manufacturing Indonesia	250,000
Karawang	Astra Daihatsu Motor	200,000
Karawang	Isuzu Astra Motor Indonesia	80,000
Karawang	Honda Prospect Motor	200,000
Bekasi	Suzuki Indomobil Motor	270,000
Bekasi	Mitsubishi Motors Corporation	160,000
Bekasi	Wuling	120,000
Purwakarta	Nissan Motor Indonesia	250,000
Purwakarta	Hino Motor Manufacturing Indonesia	75,000
Sunter	Astra Daihatsu Motor	330,000
Sunter	Gaya Motor	40,000
Pulo Gadung	Fuso-Mitsubishi	150,000
Gunung Putri	Mercedes Benz Indonesia	20,000

The reason why HPM selected Karawang as location for its factories is purely due to the location's strategic strength: good connectivity reduces logistics costs. As HPM does not export any cars yet, it is focused on domestic sales (the company does export its car components, mainly to ASEAN countries).

Meanwhile, Imam Choeru Cahya, Group Head MMC Sales Group Krama Yudha Berlian Motors (KTB), said his company is nearly finished building a new factory in Bekasi. KTB is the official distributor for Mitsubishi vehicles in Indonesia. The plant is expected to become operational by April 2017 and will produce the Pajero Sport vehicle with a production capacity of 160,000 units per year.

Nandi Julyanto, Director of Production at the Karawang plant of Toyota Motor Manufacturing Indonesia (TMMIN), said his company selected Karawang for its factory because the location has great strategic strength and there are wide land banks available. This is important because car manufacturers need a lot of space to park their output. Moreover, over the past two decades there emerged a number of car component suppliers in this region, hence making it easier to coordinate the flow of goods between factories.

Jongkie Sugiarto, Chairman of the Indonesian Automotive Industry Association (Gaikindo), said the region east of Jakarta has been chosen by many car manufacturers for their production base since a decade ago as the area's infrastructure is good (including the supply of electricity, gas and menpower). He added that it has now become difficult to find large-sized land for new factories due to the influx of many businesses over the past years. Moreover, land prices have soared over the years.

With a population that numbers 255 million people and per capita car ownership still low, Indonesia is the biggest car market in the ASEAN region (although in terms of car production Thailand remains the region's clear leader). Fandy emphasizes that the government needs to focus on infrastructure development to make Indonesia's automotive industry more competitive. It is also important that the nation's inflation and interest rates are low in order to boost people's purchasing power. With the right macroeconomic environment, investors will continue to invest heavily in Indonesia's automotive industry in the next five years, Fandy says.

Read more: Overview & Analysis of Indonesia's Automotive Industry

Amid the economic slowdown, car sales in Indonesia declined over the past three years. However, a rebound may occur in 2016. According to the latest data from Gaikindo, Indonesian car sales totaled 874,703 units in the first ten months of 2016, up 2.5 percent (y/y) from 853,089 cars in the same period one year ago.

Indonesian Car Sales (CBU):

Month	Sold Cars       2012	Sold Cars       2013	Sold Cars       2014	Sold Cars       2015	Sold Cars       2016
January	76,427	96,718	103,609	94,194	85,003
February	86,486	103,278	111,824	88,740	88,208
March	87,917	95,996	113,067	99,410	94,093
April	87,144	102,257	106,124	81,600	84,770
May	95,541	99,697	96,872	79,375	88,567
June	101,746	104,268	110,614	82,172	91,498
July	102,511	112,178	91,334	55,615	61,893
August	76,445	77,964	96,652	90,537	96,291
September	102,100	115,974	102,572	93,038	93,156
October	106,754	112,039	105,222	88,408	91,846
November	103,703	111,841	91,327	86,938
December	89,456	97,706	78,802	73,264
Total	1,116,230	1,229,916	1,208,019	1,013,291

 

	2008	2009	2010	2011	2012	2013	2014	2015
Car Sales (car units)	607,805	486,061	764,710	894,164	1,116,230	1,229,916	1,208,019	1,013,291
Car Exports (car units)	100,982	56,669	85,769	107,932	173,368	170,907	202,273	207,691

^{Source: Gaikindo}

‹ Kembali ke Kolom Bisnis

Bahas

Silakan login atau berlangganan untuk mengomentari kolom ini