Toyota to shift Thai output base to Indonesia

[bazmlb]

County president cites strong demand, growing middle-class as production of all-new Vios starts in West Java plant

Toyota Motor Manufacturing Indonesia (TMMIN) has started producing its all-new Vios at the company’s plant in Karawang, West Java, as it gradually moves its production base from Thailand to Indonesia.

The company, which usually imports the Vios compact sedan from Thailand, has spent 2.5 trillion rupiah (Bt6.7 billion) in initial capital on its expansion in Indonesia.

TMMIN president-director Masahiro Nonami said the persistently strong demand for cars in Indonesia, driven by its growing middle-class segment, had attracted his company to make the country a Vios production base.

“We see Indonesia as one of the most important markets for automotive products among other Southeast Asian countries,” he told a press conference at the plant on Wednesday, the first day of the local production of the Vios.

“The Vios production base in Karawang can absorb some 500 workers to our plant,” he said.
The company plans to produce 1,000 Vios sedans every month.

“Currently, we have approximately 100 auto-part suppliers, with local companies constituting some 20 per cent of the suppliers, while the remaining 80 per cent are made up of Japanese and joint-venture companies,” he said.

Nonami said Toyota currently contributed 87 per cent to Indonesia’s automotive sales figures and the company hoped to increase its contribution to 90 per cent with the local production of the Vios.

He added that thus far, his company had yet to determine whether to export the Vios from Indonesia, as it was still formulating strategies to increase its domestic sales figures.

Toyota seeks to shift its production base gradually from Thailand to Indonesia and hopes to complete the move some time next year.

The car manufacturer also plans to start producing the Toyota Yaris, which it also currently imports from Thailand, in Indonesia next year.

Toyota Motor Thailand sold 516,086 units in the Kingdom last year, or about 37 per cent of the country’s total domestic car sales, The Nation has reported.

Toyota dominated the Indonesian auto market last year, with 405,414 units sold, or 36 per cent of total domestic car sales, according to data from the Association of Indonesian Automotive Manufacturers (Gaikindo). The sales figure was 30 per cent higher than the previous year.

“Although Indonesia is a very attractive market for automotive products, some problems in the country, such as traffic gridlock, high production costs and increasing minimum wages, need to be addressed to attract more automotive companies here,” Nonami said.

He said Toyota might double or triple its annual car production in Indonesia if the country improves its infrastructure, for example, by improving port efficiency.


-- Automotive Focus Group Thailand 2013-12-21

[harrry]

Looks as if the flooding in Thailand had a ripple (or wave) effect and even Toyota has started seing the grass greener in other pastures. Unfortunately not a good sign for Thailand.

[keemapoot]

Looks as if the flooding in Thailand had a ripple (or wave) effect and even Toyota has started seing the grass greener in other pastures. Unfortunately not a good sign for Thailand.

Not so sure this is anything to be concerned about really. Every auto maker knows Indo is the biggest potential market in SEA, and local manufacturing makes sense and is already being done, but creating an entire ecosystem of local suppliers to match or exceed Thailand doesn't happen overnight. It would take years to do. And, though I'm not an auto industry expert, I do have a lot of experience in Indo in other industries, and typically they require local content that is unrealistic often, so that it will be hard to grow the industry faster if they are using those same approaches in the auto industry development.

[sjjmmi]

Are, looks like game over for Thailand, more will follow for sure

[Briggsy]

Car manufacturers shift production of specific models on a regular basis. To draw any conclusions at all from this, you would need a much greater set of facts.

I would be interested to know whether Toyota eventually decide to import Vios's manufactured in Indonesia to Thailand. I believe Suzuki's Grand Vitara is manufactured in Indonesia and one of the models (2WD petrol) is available here.

[Tywais]

A good choice business wise as Indonesia is the 4th largest country by population with 250 million and growing rapidly due to population control policies failing. Jakarta's metropolitan area is the 2nd largest in the world at 28 million and growing faster than Bangkok or Beijing.

Worldpopulationreview

[Jitar]

Tax incentives, subsidies import protection and labour cost are probably as important to Toyota as the macro economics. The automakers are pretty good at negotiating deals, especially when there are two keen competitor countries like Indonesia and Thailand.

Thailand and Indonesia are old sparring partners in the Auto and many other industries. They both have healthy does' of corruption, traffic, bizarre politics and a dominant Toyota. Thailand prides itself on being the pickup capital of SEA, Indo is similar for MPVs. Indonesia has some way to go to reach Thai exports but it clearly has ambitions.

[Nibbles48]

This will be a blow to Thailand.

Vios and Yaris moving to Indonesia, and they won't be back.

The government's populist new car tax credit has probably contributed to this decision, by bringing future sales forwards, with many now dumped on the bank as defaults I believe I read 20% somewhere, possibly Forbes.

So sales here will have declined a lot and will also stay that way for a few years to come, and with the new Asean 2015 Community starting soon, which will have an impact of probably wiping out import duty to send them back here. I think the minimum wage also had a bit to do with it.

Just my opinion.... not fact.

[IMHO]

Looks as if the flooding in Thailand had a ripple (or wave) effect and even Toyota has started seing the grass greener in other pastures. Unfortunately not a good sign for Thailand.

Not so sure this is anything to be concerned about really. Every auto maker knows Indo is the biggest potential market in SEA, and local manufacturing makes sense and is already being done, but creating an entire ecosystem of local suppliers to match or exceed Thailand doesn't happen overnight. It would take years to do. And, though I'm not an auto industry expert, I do have a lot of experience in Indo in other industries, and typically they require local content that is unrealistic often, so that it will be hard to grow the industry faster if they are using those same approaches in the auto industry development.

Yep, the other point of note here is their production volumes - 1000 units/month is about 20% of TH domestic sales. Seems an Indonesian journo is having a bout of national pride in this story

[IMHO]

This will be a blow to Thailand.

Vios and Yaris moving to Indonesia, and they won't be back.

The government's populist new car tax credit has probably contributed to this decision, by bringing future sales forwards, with many now dumped on the bank as defaults I believe I read 20% somewhere, possibly Forbes.

So sales here will have declined a lot and will also stay that way for a few years to come, and with the new Asean 2015 Community starting soon, which will have an impact of probably wiping out import duty to send them back here. I think the minimum wage also had a bit to do with it.

Just my opinion.... not fact.

Production isn't moving, it's just being setup. Malaysia has been assembling the VIOS for several years as well - but the journo's that covered that launch didn't sensationalize their stories with words like "shift" and "move" like this one did

[hansnl]

Whenever a car manufacturer is shifting part of it's production capacity from one country to another, something is going on.

It just might be moving production to a bigger market due to whatever reasons.

But, as Asean is coming on line soon, the reasons are not import/export related government taxes.

It simply is wages, costs and government incentives.

If things go well with the start of production in Indonesia, be certain more will follow.

And if Toyota goes, who will follow?

[brianP]

The Proton and other Indo-Malay made vehicles are appearing everywhere it seems.

[Ulic]

Indonesia's has a much bigger population so far more potential for sales. No surprise here, car companies like to

produce cars in the emerging markets were they will be sold. The flooding in Thailand makes for an earlier

curtailing of production and a shift to Indonesia.

[ronrat]

Jakarta is gridlocked now. The Indons will have to spend billions on infrastructure to absorb any increase. And any new road will have 10 toll booths set up so each General can get his cut. I dare say Toyota will be hosting a few pro am golf days. Every time they have one a General gets a hole in one and wins a car. Well everyone looks away when he tees off and the same brand ball and number end up in the hole. My mate was playing in one in Kalimantan and the local TNI boss turns up in a taxi. On a very difficult par 3 with a Ford up for grabs the rest of the group was "distracted". He heard the stroke and also heard a ball hitting a lot of trees. The ball ended up in the hole. The keys were handed over and Ford had the foresight to fit a baby restraint in for the Generals kid and he got in and the seat was perfect and mirrors all set.

[Briggsy]

Baby seats in S E Asia!! Unheard of.

[belg]

thailand : at least one big problem per year, a lot of red tape, corruption, ridiculous import taxes and not so educated/motivated/loyal workers

nail in the coffin

beginning of the end

[Emdog]

When I saw the headline I thought of saying "Money talks and bull sh*t walks" but then flipped it to fit here. Bullsh*t talks and the money walks".

[guzzi850m2]

thailand : at least one big problem per year, a lot of red tape, corruption, ridiculous import taxes and not so educated/motivated/loyal workers

nail in the coffin

beginning of the end

So the same as Indonesia then

It makes perfect sense that they start a Toyota plant in Indo, they expect to sell way more cars there when more and more people can afford them.

As IMHO said: They will still be producing the Viros here and they also do in Malaysia and now soon in Indonesia.

So the Viros is made all over SEA, it's like a virus man, but not likely to spread to Australia

[louse1953]

thailand : at least one big problem per year, a lot of red tape, corruption, ridiculous import taxes and not so educated/motivated/loyal workers

nail in the coffin

beginning of the end

And Indo will be different!

[Halion]

It was only a mater of time and the first of the financial rodents to leave the sinking ship and a testament to the ignorance and arrogance of the Thai Government

[VocalNeal]

Toyota is and was always the biggest selling auto maker in Indonesia. Kijang/Innova is the national car. That Indonesians are shifting to sedans rather than vans is all that is happening.

[DrTuner]

The real question is, is it the spearhead of a trend or just business as usual. I guess time will tell.

[bifftastic]

Are, looks like game over for Thailand, more will follow for sure

Ok, so, if that were true, and it was 'game over for Thailand' why would that be something to applaud and laugh at?

[Bucko]

Tax incentives, subsidies import protection and labour cost are probably as important to Toyota as the macro economics. The automakers are pretty good at negotiating deals, especially when there are two keen competitor countries like Indonesia and Thailand.

Thailand and Indonesia are old sparring partners in the Auto and many other industries. They both have healthy does' of corruption, traffic, bizarre politics and a dominant Toyota. Thailand prides itself on being the pickup capital of SEA, Indo is similar for MPVs. Indonesia has some way to go to reach Thai exports but it clearly has ambitions.

I assume you mean the small truck type Jitar----and not a lady----I'm sure you do--

Anyway thanks for the early morning and Merry Xmas

[mikemac]

Are, looks like game over for Thailand, more will follow for sure

All you chronic Thailand bashers should not get too excited. This is not quite the end of the world for Thailand that you yearn for.

Judging by the emicons used above it has made someone's day.

[IMHO]

Guys, it's all just business as usual.

[bangon04]

I seem to remember that the old Vios was not sold in Europe, because it failed the safety tests?

Is the new bigger more expensive Vios going to be a best seller in Asia?

[sydneyjed]

Toyota will go wherever they can make cars for the cheapest price..Thailands' baht currency and subsequent increase in living standards means they are now fast becoming a cost prohibitive place to manufacture cars. Bangladesh Vietnam Cambodia...all on the radar at some stage if/when infrastructure is improved!

[Jitar]

Tax incentives, subsidies import protection and labour cost are probably as important to Toyota as the macro economics. The automakers are pretty good at negotiating deals, especially when there are two keen competitor countries like Indonesia and Thailand.

Thailand and Indonesia are old sparring partners in the Auto and many other industries. They both have healthy does' of corruption, traffic, bizarre politics and a dominant Toyota. Thailand prides itself on being the pickup capital of SEA, Indo is similar for MPVs. Indonesia has some way to go to reach Thai exports but it clearly has ambitions.

I assume you mean the small truck type Jitar----and not a lady----I'm sure you do--

Anyway thanks for the early morning and Merry Xmas

Both are true but some take more pride in one than the other.