Honda Prospect Motor, the sole local distributor and assembler for the Japanese automaker, began construction on Monday on its second manufacturing plant, part of its effort to expand into Indonesia’s low-cost car market.
Honda has invested Rp 3.1 trillion ($329 million) for the plant, located in Karawang, West Java. The company expects it to start production by early 2014. The plant is expected to triple Honda’s local production capacity to 180,000 cars a year.
Takanobu Ito, chief executive officer of Honda Motor, which owns 51 percent of Honda Prospect Motor, said that aside from producing flagship Honda cars such as the Jazz, CR-V and Freed, the new plant would also produce low-cost models, which account for the majority of Indonesian car sales.
“The plan is that it will produce new models such as the Honda Brio,” Ito told reporters during a groundbreaking ceremony on Monday.
Ito did not provide a production target or any pricing information for the Brio, which is sold for 399,000 to 500,000 baht ($13,000 to $16,000) in Thailand.
Jonfis Fandy, HPM’s marketing and after-sales service director, said the company would introduce a five-seat Brio imported from Thailand later this month with a selling price of under Rp 200 million.
Jonfis also said Honda planned to produce the Brio MPV, a larger version of the car with seven seats, when the plant starts production. He said the Brio MPV price would not top Rp 200 million.
Ito said, “With the automotive market growing and conducive economic conditions, this country holds big potential for the automotive industry.”
Indonesians bought a record 894,180 vehicles last year — a 17 percent increase from 2010, according to data from the Association of Indonesian Automotive Industries (Gaikindo). Sales growth is expected to slow to around 5 percent this year, but carmakers remain upbeat that Indonesia will overtake Thailand as the biggest auto market in Southeast Asia.
Karawang, around 75 kilometers east of Jakarta, is home to many of the country’s car and motorcycle manufacturing plants and shoe factories.