New car models for a recovering market

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JAKARTA -- Japan's Mitsubishi Motors on Friday launched its latest Pajero Sport, a seven-seat sports utility vehicle (SUV), ahead of an expected improvement in Indonesian consumer confidence this year.

     The vehicles will sell for around 500 million rupiah ($35,000), and initially be imported from Thailand with target sales of 1,000 units per month, rising to 2,500 per month after local production kicks in next year.

     "Indonesia is a very large and important market for us," Tetsuro Aikawa, Mitsubishi's president and chief operating officer, told reporters on Friday. He said a new minivan will be unveiled at a local motor show in August and go into production after a new factory opens in April next year.  

     Mitsubishi aims to sell a total of 130,000 vehicles this year in Indonesia, compared to 112,000 in 2015. By mid-2018, the new factory on the outskirts of Jakarta will have an output capacity of 160,000 vehicles. Mitsubishi's projected sales this year are for 90,000 passenger cars and 40,000 pickup trucks.

     In 2015, Indonesian car sales dipped 16% year on year to 1.01 million vehicles after a drop in commodity prices weakened consumer appetite and the sliding rupiah pushed up import costs.

     Hisashi Ishimaki, president of Mitsubishi Motor's Indonesian subsidiary, expects demand to rise in the second half of 2016 as government infrastructure projects go forward. He predicts a 5-10% increase in overall car sales and that the SUV segment "will grow even more".  

     Mitsubishi Motors will be competing in similar product segments with other Japanese companies. Toyota recently announced new versions of its Kijang-Innova minivan and Fortuner SUV, while Honda launched the BR-V, a new SUV.

     Japanese carmakers account for over 90% of the Indonesian automotive market. Ford Motor, which does not have a factory in Indonesia, recently announced its complete exit from the country by the end of this year.