Honda’s Mobilio Set to Enter the Indonesia Market

Japanese automaker Honda Motor announced its first ever multipurpose vehicle designed specifically for Indonesia as it seeks to benefit from the country’s fast-growing car market.

Takanobu Ito, president and chief executive of Honda Motor, introduced the Honda Mobilio prototype on Thursday during the 2013 Indonesia International Motor Show in Jakarta.

The Mobilio is a multipurpose vehicle with a 1.5-liter engine and an expected price tag of between Rp 150 million and Rp 180 million ($13,300 and $16,000).

The vehicle’s higher ground clearance is a feature widely preferred by Indonesian buyers to match local road conditions, especially in rural areas. It is unlike Honda’s most popular model here currently, the Jazz, designed as a city car with lower ground clearance.

“This is the first time Honda developed a prototype especially designed for the Indonesian market,” Ito said.

He said this would be an important model for Honda in Indonesia because it would be developed in its new plant in Karawang, West Java, which will start production early next year.

The new model is part of Honda’s efforts to penetrate the huge local market currently dominated by fellow Japanese automakers Toyota and Daihatsu.

Tomoki Uchida, president director of Honda Prospect Motor, the carmaker’s local unit, said the company always aimed for a specific target market. It is now trying to penetrate the Indonesian market as it will increase its production capacity to 200,000 units per year in 2014.

Honda is currently expanding the capacity of its existing plant in Kawarang from 60,000 units annually to 80,000 units. It is also building a new plant next door, with annual capacity of 120,000 units.

Uchida said the company aimed to sell 300,000 units in 2016, compared to its projected sales of 100,000 this year.

Jonfis Fandy, marketing director at Honda Prospect Motor, said the Mobilio would be the first model to be produced at the new plant as soon as it goes into operation early next year.

Jonfis would not reveal any information on sales targets or production volumes for the new model, saying details about the Mobilio would be announced today.

Other than the Mobilio, Jonfis said the Honda Brio, a sub-compact hatchback, is expected to help boost sales. The company has also recently introduced the Brio Satya, a cheaper variant, to take advantage of the government’s Low-Cost Green Car tax reduction scheme. The Brio Satya will retail for about Rp 106 million.

Jonfis said out of the total sales target of 4,000 units for the Brio, 30 percent was expected to come from Brio Satya sales. Honda hopes to receive sales orders for around 3,200 units during the 10-day IIMS.

Amid concern about slowing demand for cars, Jonfis said the event still offered good sales prospects for the company.

“This may be the last good month for customers to buy cars. The financing companies haven’t increased their interest rates yet, and they are expected to do so after the motor show,” he said.

In an effort to control inflation and stop a depreciating rupiah, the central bank has increased the key interest rate by a total of 150 basis points since May. Banks and financing companies are expected to adjust their lending rates to maintain their margins.

According to data from the Association of Indonesian Automotive Industries (Gaikindo) , Honda sold 62,010 cars between January and August this year.