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Subaru Eyes Big Push in Indonesia, Malaysia
Christopher Tan - Straits Times Indonesia | July 16, 2011

Singapore car maker Tan Chong International plans to assemble 5,000 Subaru Impressa XV models in Malaysia starting next year for sale in Indonesia, Malaysia and Thailand. Singapore car maker Tan Chong International plans to assemble 5,000 Subaru Impressa XV models in Malaysia starting next year for sale in Indonesia, Malaysia and Thailand.
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Serigala-Berbulu-Domba
12:34pm Jul 16, 2011

Subaru hasn't demonstrated that it is at all serious in terms of a significant Indonesian prescence over a long period of time, so why would folks take these plans for Subaru to hike it's presence in Indonesia seriously this time around?

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Singapore’s shrinking car market has prompted motor and property group Tan Chong International (TCIL) to spread its wings in Malaysia, Indonesia and Thailand. 

Its regional expansion is being spearheaded by a joint venture with Fuji Heavy Industries - the manufacturer of Subaru cars - to assemble the XV crossover in Malaysia.

The first cars will roll out of Tan Chong Motor Assemblies' plant just outside Kuala Lumpur in October next year.

TCIL executive director Glenn Tan said that the plant will assemble 5,000 cars in the first year with the number projected to grow by 10 per cent a year.

“If successful, we will add a second model, likely the Forester,” he added, noting that the Malaysian-assembled cars will be sold in Malaysia, Thailand and Indonesia.

Part of the plan - estimated to cost $20 million to $30 million - calls for expanding the Subaru dealership network in the three countries to 60-plus outlets from just six today.

“It is a significant development,” Tan said. “At the moment, we're selling fewer than 100 cars a year in each of the three markets.” He expects the deal to boost revenue tenfold and he is targeting a 5 per cent to 7 per cent margin for each car.

Hong Kong-listed TCIL posted net earnings of HK$639 million (S$100 million) last year on revenue of HK$6.2 billion - up from HK$523 million and HK$4.9 billion in 2009, and profit of HK$61 million on revenue of HK$5.3 billion in 2008.

Tan said he might bring some Malaysian-assembled Subarus to Singapore:

“We can have the high-specifications version from Japan, and a more basic version from Malaysia. “Already, Thai-made cars have gained high acceptance here. And the fact we're the ones assembling [them] could win more trust.”

Tan Chong Motor Assemblies has been assembling cars for 35 years, having built Nissans, Subarus and Audis.

The new Subaru XV will compete with cars in a segment dominated by the Honda CR-V. Tan said he expects to garner a 10 percent to 15 percent slice of the market, which translates to 1,700 to 1,800 cars a year in each of the three countries.

Like most Japanese brands, Subaru is not doing well in Singapore because a tight quota has sent premiums soaring, rendering makes with thinner margins uncompetitive against those with fatter profits.

TCIL sold only about 150 Subarus in the first half of the year, down from 680 in the same period last year.

The group's other franchise, Nissan, has also been hit, with first-half sales down to 460 from around 1,260 last year. “We're focusing on Nissan commercial vehicles now,” Tan said. “There are fewer competitors in that segment. We're actually No. 1 there.”

Tan said much of TCIL's earnings prospects this year would depend on the availability of stock, which was disrupted by the March earthquake and tsunami in Japan.

The launch of the new Subaru Impreza, originally slated for this month, has already been postponed to next year.Reprinted courtesy of

Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 021 2553 5055.