Daihatsu is set to make Indonesia an integral part of its business expansion globally, according to a report in the Nikkei. The Japanese small car specialist, which posted a record 103.4 billion yen operating profit for the fiscal year ending March, is already very much a leading marque in Indonesia, but is looking at the country to provide a springboard for further growth elsewhere.

Away from its domestic market, Indonesia is Daihatsu’s largest overseas production and sales base, and the country also serves as its export hub to emerging markets. In 2010, the company’s Indonesian arm posted an operating profit of 33.8 billion yen, effectively triple the 11.3 billion yen it earned in 2009. This figure is good enough to account for 30% of its overall total operating profit, something not to be sneezed at.

In all, it sold 123,400 vehicles in the country last year, up 48% from 2009, adding up to an overall market share of 15.5%. Daihatsu’s parent, Toyota, has around 40% of Indonesia’s vehicle market share, and combined the brands have well over half of the share of the Indonesian market.

Now, Daihatsu is set – with the help of Toyota – to increase production in the country. It is set to spend around 20 billion yen to build a new factory, beginning in August, in the suburbs of Jakarta – when the plant is ready in 2013, it will offer an annual production capacity of 100,000 vehicles, adding to the company’s existing annual capacity of 280,000 cars there.

The new factory is expected to assemble a low-price compact of around a 1.0 litre engine displacement for the Indonesian market. The company says the vehicle will be the cheapest compact ever made by the Toyota group and will also be supplied to Toyota for sale under a different model name. Besides domestic sales, it plans to export the model to other Southeast Asean markets and elsewhere in a bid to expand its presence in Asia.