With hopes of keeping up with growth in Indonesia (Southeast Asia's top economy), Toyota has decided to raise the annual capacity at its Karawang plant in Indonesia by 50,000 cars to 120,000 cars, according to a senior official. Toyota has informed Reuters last Wednesday that it will make an additional investment of 15 billion yen ($195.11 million) in the facility.
The Kijang Innova compact MPV and the Fortuner SUV are produced at the Karawang plant intended for the domestic market and export markets like Thailand and South Africa.
In 2011, Indonesia’s domestic car sales reached a record 894,180 units, about 16.9% higher than the previous year. This was aided by the lowest ever interest rate and an expanding middle class.
Leonardo Henry Gavaza, an analyst at Bahana Securities in Jakarta, said that as many automakers want to substantially increase their capacity, it’s suggested that the industry is “bullish about Indonesia's automotive market."
Gavaza said that Indonesia's domestic car sales have exceeded those of Thailand in 2011. This helps explain the increase in direct investment in the sector. He added that car sales in 2012 would probably be flat or lower than in 2011 due to the higher base.
However, sales should hit 1 million cars in 2012 and 8.8 million motorcycles if the government withdraws its plan to increase fuel prices as well as a separate plan to raise the down payment rate for car loans by 30%.