Toyota's Local Manufacturing Unit to Invest in New Engine Plant

Finished Toyota vehicles rolling out of an assembly line of Toyota Motor's Indonesian unit, Toyota Motor Manufacturing Indonesia, in the industrial center of Karawang, West Java. (AFP Photo/Romeo Gacad)

By : Jakarta Globe | on 6:22 PM January 27, 2014
Category : Business, Corporate News, Automotive

Finished Toyota vehicles rolling out of an assembly line of Toyota Motor's Indonesian unit, Toyota Motor Manufacturing Indonesia, in the industrial center of Karawang, West Java. (AFP Photo/Romeo Gacad) Finished Toyota vehicles rolling out of an assembly line of Toyota Motor's Indonesian unit, Toyota Motor Manufacturing Indonesia, in the industrial center of Karawang, West Java. (AFP Photo/Romeo Gacad)

[Updated 9 p.m.]

Toyota Motor Manufacturing Indonesia, the manufacturer of Toyota cars in Indonesia, is planning to start building a plant that will focus on engines in West Java this year, as it strives to develop a production base in the country.

“We have acquired 150 hectares of land in West Karawang to build an engine plant, and we hope to begin operations by 2016,” said I Made Dana Tangkas, a director at TMMI, today.

He did not specify the size of the investment, except saying that it was part of Toyota’s Rp 13 trillion ($1.1 billion) investment plan in Indonesia for 2012 to 2017 — of which it may realize about 70 percent by early 2016 — and that it may be similar to that of another Toyota plant in Karawang, which cost Rp 2.3 trillion.

The factory will add to Toyota’s three existing plants, all of which are in West Java: two in Karawang and one in Sunter.

Made said that the company has been producing engines in Indonesia, with 56,367 assembled units exported in 2013.

Commenting on reports that Toyota will relocate its Thai operations to Indonesia, Made said the auto giant’s Indonesian arm had not received any official directive. However, he did say an Indonesian factory would start production of Toyota’s Yaris this year. The hatchback is currently made in Thailand.

The Yaris will be added to Toyota’s Indonesian production portfolio, which includes the multipurpose vehicle Kijang Innova, sport utility vehicle Fortuner and the sedans Vios and Limo (a stripped-down version of the Vios).

“Model lines that are produced in Indonesia will expand. Toyota is aiming to make Indonesia the production base for small-sedan models,” Made said.

With the addition of Yaris, 90 percent of Toyota’s products sold in Indonesia would have also been made or assembled in the country, according to a press statement distributed today.

TMMI currently has a car production capacity of 200,000 units in Indonesia, but that will increase to 250,000 in a year. In 2013, it produced 163,094 units, up 5 percent on the year.

About 45 percent of its production in 2013 was shipped abroad, and that figure is expected to continue to grow. The sales make-up of exports and domestic vehicles may be even this year, Made said.

“There is a lot of demand from Middle Eastern countries. Demand from other Southeast Asian countries is also increasing,” he said.

Aside from fully-assembled cars TMMI exports also include automotive parts and knocked-down vehicles, Made said.

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