Toyota Shifts Vios Output From Thailand to Indonesia

Toyota begins building its all-new Vios in Indonesia, initially at 1,000 units a month, as it begins moving the production base for the 4-door subcompact from Thailand.

PT Toyota Motor Mfg. Indonesia, which previously imported the sedan from Thailand, is producing the Vios at its plant in Karawang, West Java, after spending 2.5 trillion Indonesian rupiah ($205 million) on its expansion.

Toyota Indonesia President Director Masahiro Nonami tells the Jakarta Post continuing strong demand for cars in Indonesia, driven by its growing middle class, convinced the company it should 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 is quoted as telling a news conference.

No decision has been made on Vios exports, he says, because the automaker still is formulating strategies to increase its domestic sales.

Toyota gradually will shift Vios output from Thailand, Nonami says, adding he hopes to have its entire production base in Indonesia sometime in 2014. Also next year, it will begin local production of the Yaris, now imported from Thailand.

Vios production in Karawang resulted in 500 new jobs at the plant, he says.

Nonami says Toyota accounts for 87% of Indonesia’s vehicle sales and the automaker hopes to boost this to 90% with local production of the Vios.

Local parts account for 60% of Toyota vehicles built at the plant and the plan is to raise that share to 70% next year.

“We have approximately 100 auto-parts suppliers, with local companies constituting some 20%, (while) 80% are made up of Japanese and joint-venture companies.”

Indonesia sales are soaring, but Nonami says Toyota could double or triple its results if the country improved its infrastructure.

”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,” he says.