Mitsubishi Motors Bets Big On Indonesia

As the dust from the Indonesia election begins to settle and South East Asia’s largest economy starts to rumble back to life, albeit a little sluggishly, Mitsubishi Motors Corp has announced that it will take the lead in the construction of a new factory in an industrial plant 37km east of the capital, Jakarta. Mitsubishi will be investing a total of US$600 million in the plant of which US$250 million will be spent designing and building a brand new MPV that will seat eight passengers.

Mitsubishi is considered a second tier manufacturer in Japan as they only have global sales of about one million vehicles a year, with sales in their domestic market shrinking further. Mitsubishi, though, has a history of success in South East Asia where about 25% of their global output ends up. The new factory will have a capacity of 160,000 vehicles with the option of expanding to 240,000 in the future.

With help from the new plant, which it is thought will be exempt from some local taxes for a honeymoon period, Mitsubishi aims to raise their Indonesia market share from 8% to 13% and make Indonesia its second biggest production base in South East Asia after Thailand. This may be a tall order with Toyota in such a dominant position in the market place, but the Association of Indonesian Automotive Manufacturers expects car sales to increase by 10% this year to 1.3 million vehicles, so there is room for increased sales even if they do not win market share.

Mitsubishi Chief Executive, Osamu Masuko, said that increasing production and sales volume in one of the world’s most populous countries made sense for long-term growth of the company; he added, "Indonesia’s population still increases every year, so in the future the Indonesian market will become bigger and bigger."

Eight-seater MPV’s are the vehicle of choice for so many Indonesians and the sector is currently dominated by Toyota’s Avanza, but competition is heating up with Honda’s Mobilio vying for market share.

The new plant will go on-line sometime in 2017 when Mitsubishi plans to build 80,000 MPV’s per annum with at least 60,000 of them for Indonesian consumption and the balance 20,000 for export to other South East Asian nations. 

image: reuters.com