Indonesia makes bid for troubled Thai production

INDONESIA is making a pitch to build more cars as it takes stock of a growing sense at Toyota that political instability in Thailand is turning the company off further investment in the troubled kingdom.

The Jakarta Post reported last week that Toyota may expand production in Indonesia beyond its current 250,000 annual capacity in line with the car-maker’ s long-term plans to develop the country into a regional manufacturing hub.

Indonesian industry minister MS Hidayat told the Post he had asked Toyota to increase its production at four local plants by 30 per cent in a bid to boost exports of vehicles.

He also said Toyota was looking to producing more eco-friendly cars, particularly hybrids, in Indonesia and had asked the government to provide incentives to lower prices that were up to 40 percent higher than for conventional cars.

Earlier this year, the Japanese car-maker broke ground on a new engine plant in West Java that will officially open in early 2016 – more than a year before Toyota Australia winds down its Australian production of the Camry and Camry Hybrid mid-size cars and Aurion large car – with the aim of exporting half its capacity.

It will be Toyota’s second engine plant in Indonesia, with production expected to peak at 260,000 engines annually, the company said.

A spokeswoman for Toyota Australia declined to comment on whether the $330 million Altona engine-casting plant, opened in late 2012 to make the 2.5-litre four-cylinder engine used for the Camry and Camry Hybrid sedan and built using $63 million in taxpayer support, could also end up in Indonesia, saying it was a decision for Toyota’s global management.

Speculation is also rife that the near-new Australian engine plant, which was to have a capacity of 108,000 engines a year for exports to Malaysia and Thailand, is likely to end up in Thailand at Siam Toyota Manufacturing once local production ends in late 2017.

Toyota’s Indonesian operations currently make vehicles mainly for developing markets, however, the Japanese car-maker went ahead with plans earlier this year to move some production of its Yaris from Thailand to Indonesia. Australian-spec Yaris models are sourced from Japan.

The car-maker is also yet to announce where Australia’s annual production capacity – currently standing at about 110,000 Camry mid-size and Aurion large vehicles and including about 80,000 exports a year to the Middle East – will shift to once production at the company’s Altona plant winds down ahead of its 2017 closure.