vw production

Volkswagen, the German giant aiming to be the world’s largest carmaker, is set to build a new plant in South-East Asia’s largest economy, according to an Indonesian government minister.

Industry minister Mohamad Hidayat said that the new factory will be in Cikampek, West Java, and that VW is expected to announce the plan officially later this year, according to reports. This should be a full-scale plant, an upgrade from the current assembly plant with Indomobil Group that rolls out Semi Knocked Down (SKD) units of the Transporter and Multivan.

“They [VW] will announce the plan in November or December,” he told reporters after a meeting with company officials in Jakarta. His personal estimate is that the Wolfsburg-based carmaker will pour in an initial investment of 200 million euros (RM883 million).

“It [VW] has carried out in-depth research to understand our market, its competitors, efficient selling price and other things. With its proposed plan, it means it’s ready for competition,” the minister added.

vw paint shop robots

Daily Jakarta Post adds that the German-based automaker might take part in a government-backed green car programme with the possible production of hybrid cars. Under a new regulation, domestic production of eco-cars, dubbed “low carbon emission cars” in the republic, will enjoy tax reduction. Cars capable of 20 to 28 km/l can get a 25% reduction in sales tax, and those that better 28 km/l might enjoy up to 50% tax cuts.

This is happening as Malaysia is trying to position itself as the energy efficient vehicle (EEV) production hub of the region. More details are expected to emerge along with the revised National Automotive Policy (NAP), which has been delayed. The eco-car idea was kicked off in the region by Thailand, which now has Japanese carmakers like Nissan, Honda and Mitsubishi churning out compact, fuel-efficient models in the Kingdom.

If VW is to realise its ambition to be No.1, it needs to start getting serious in ASEAN, a growth market. This is Toyota-land, and while it’s very strong in China, the German carmaker has a tiny presence in South-East Asia, and no affordable big volume seller to go head-to-head with the Japanese brands. VW does local assembly in Malaysia in partnership with DRB-Hicom.

Volkswagen is targeting annual vehicle sales of 10 million in 2018. In 2012, the group sold 9.07 million units, behind GM with 9.29 million and current sales champ Toyota, which sold 9.75 million vehicles.