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China's Geely Motors to Debut in Indonesia
May 25, 2007

Chinese automobile company Geely Motors is all prepared to enter the Indonesian automobile market. Indonesia offers a great scope to Geely, as its auto market hasn’t reached its saturation yet.

The local press, on May 18, 2007, said that Chinese automobile company Geely International Corp. is all set to enter the reviving Indonesian automobile market to capture a profitable and dominating sector of the market by with Geely CK Sedan, as per the news published on English People.

Malaysia-based companies PT IGC International and PT Gaya motor will assemble the news cars that are going to enter the market in July. According to the news published on
The Jakarta Post, the President Director of Geely International, George Zhao, on May 16, 2007, at the time of signing the contract demand between geely international, IGC international, and Gaya motors, addressed a media conference and said “Our idea is to supply the market with a quality product at an affordable price”.

The automobile industry of Indonesia is thriving at a fast pace due to easy car loans offered by banks at low interest rates supplemented with the increasing availability of low priced cars. These models are priced cheaper as they are assembled in the homeland. Global car manufacturers are gradually recognizing the increasing potential of the Indonesian automobile market.

Indonesia, being a member of ASEAN, is attracting the Chinese automakers to enter the Indonesian market. Member countries of ASEAN, who use ASEAN as their production base, benefit from the reduced import and export tariffs within the region. As per the rules set by AFTA (ASEAN Free Trade Agreement), if a vehicle has a minimum of 40% of local content, then it can be exported to other areas in the regions by paying a duty of 5% only. Indonesia is deciding to cut this charge down to zero by 2010

As per a research analyst at
RNCOS, “ International car manufacturers, who control 90% of the entire automobile market, are competing on the lands of Indonesia. Overseas carmakers are upgrading and expanding their manufacturing capacities to cater to the demand and to leverage the growth potential of the comparatively low ratio of car ownership in the fourth most populous country of the world. Statistics say that out of 35 Indonesians, less than 1 owns a car, lower than the 1:14 ratio of Thailand and 1:7 ratio of Malaysia. This shows that there is wide scope for growth in the Indonesian automobile market”.

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