Daihatsu Concept Car Could Trigger Bigger Industry Role for Indonesia

JAKARTA – Despite its diminutive dimensions, the concept car unveiled here last week by Japan’s Daihatsu potentially could become the most significant vehicle in a shifting automotive landscape that has this country poised to explode on the global scene within the next decade.

Not only is the Daihatsu A-Concept, revealed at the 19th Indonesian International Motor Show, the first production-focused concept vehicle to be designed and built in Indonesia, it is unashamedly being pitched as the car that will “motorize” the nation.

With 238 million people, Indonesia has the fourth-largest population in the world and, thanks to its vast natural resources, currently is the 18th-largest economy.

Vehicle production is getting into gear now. After an average 20% growth over the last five years, the 700,000-unit production barrier was broken last year. If current rates continue, output will reach 1 million vehicles annually within the next two years.

First-half 2011 production stands at 417,687 units, and the industry’s trade group predicted at the auto show total calendar-year volume will hit 780,000-830,000 units.

The government, which has made the auto industry one of its five priorities, is targeting production of 2 million vehicles annually within six years. Much of this added volume will be aimed at the local market, as per capita gross domestic product continues to grow.

But the burgeoning domestic market and manufacturing base also will serve as fuel for Indonesia’s export ambitions.

“We have an economy moving forward,” Hatta Rajasa, coordinating minister for economic affairs, declares at the auto show’s opening ceremony. “We will outperform Thailand in a few years.”

A-Concept on stand at Indonesian International Motor Show.

Thailand is the auto industry’s current regional hub, producing well over double the number of vehicles as Indonesia. It also is locked in a push toward production of 2 million units annually.

But Hatta insists Indonesia will win the race, becoming not only “the largest automobile market in Southeast Asia,” but “the largest production hub for the East Asian markets.”

He says the government is ready to support the growth of eco cars, as it gears up to copy the Thailand blueprint. As a result, the A-segment A-Concept could be poised to usher in a new era.

That potential isn’t lost on Daihatsu’s local operation, PT Astra Daihatsu Motor (ADM). It has laid down its cards with the concept and now is looking for government support for a low-cost car program that will open the way to putting the nation on wheels.

GDP per capita is now at $3,000 and the middle class is growing. But auto industry analysts say the market won’t really take off until GDP/capita reaches $5,000. As that gap closes, tens of millions of people are expected to become first-time car buyers here in the next 15 years.

ADM is on the rise, as well. After two decades here, ADM passed the 2 million-unit production mark in third-quarter 2010, with half of that volume coming over the last five years. Last year, it broke through the 300,000-unit barrier for the first time, and in May it started building a new plant that will lift annual production capacity from the current 330,000 vehicles to 430,000.

ADM wants to become Daihatsu’s low-cost global hub and achieve equal status with operations in Japan. In a sign of its growing strategic importance to its parent, ADM President Sudirman Maman Rusdi was named the first Indonesian to the company’s board in Japan.

As part of the push to drive ADM to new heights, workers are being trained in Japan in new production standards and techniques and familiarized with advanced technology.

“We think it is very important to pursue production quality, enforcing the skill of production and (research and development),” Sudirman says.

“I’m sure these excellent staff and our new plant will bring the Indonesian automobile society onto the next stage,” Sudirman says.

The A-Concept is well executed, with a design that is straightforward, distinctive and coherent. The styling language draws on current automotive fashion trends: The nose mimics the Ford Fiesta somewhat, while the tailgate’s curves hint at the VW Polo.

The headlights and taillights feature LEDs, and flush-fit door handles pop out on touch. The cabin is simplistic but ergonomically designed and seats five.

ADM says it is in position with the A-Concept to propel the local industry to the next level.

“Daihatsu is ready,” Sudirman says, and is now “waiting for the government.”

Hatta hints the government is moving to embrace the challenge. The first incentives to kick-start eco car demand in the market could be in place within months.