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Booming Indonesia Automotive Market Attracts Volkswagen
Jun 01, 2007

Volkswagen, which is the world’s fourth largest car making company, is looking forward to enter the Indonesian automobile market. As, the automobile market in the country has undergone a phenomenal growth in the past few years.

A senior government official, on May 22,2007 said that Volkswagen, the world’s fourth largest carmaker, had plans to set up a manufacturing base in Indonesia. The director general of the trade ministry Budi Dharmadi said, that the company seemed determined in its decision to establish the production base, as expressed by it in a meeting with the trade minister Fahmi Idris, as per the news published on

Dharmadi told
Reuters, “They are interested in entering the Indonesian market. It might be in theform of investment in an assembling plant. Right now, they are still conducting a study for the possible investment”.

At present, the Japanese firm that is dominating the Indonesian automobile market is primarily Toyota. Besides Toyota, companies like Honda, Daihatsu, Mercedes- Benz, Nissan, and BMW also have their manufacturing base in Indonesia. Volkswagen is also now planning to enter the Indonesian automobile market to capture a part of the country’s successful automobile market.

The most important reasons for the booming automotive sector in Indonesia are the easy availability of car loan complimented by reduced interest rates and abundance of low priced car models.

After recovering from the economic downfall that the country experienced over the past few years, the automobile sector in Indonesia has been growing steadily and thus shows immense growth potential. This industry shows no indicators of slowing its growth rate in the near future. It is expected to maintain sound growth of 10% approximately, in the years to come.

The Indonesian automobile industry is all set to enter a new domain. The reports of ministry of industries indicated, that the automobile production of the country rose by 20% i.e. from 3,80,000 to 4,00,000, which is a laudable growth for the country. The automobile industry of Indonesia profits not only from the domestic customers, but also from the automotives that it exports to other countries. 

The ministry further said that the investment made in the Indonesian Automobile Industry would also increase from approximately Rp3.9 Trillion to Rp4.1 Trillion in the current year. This would in turn lead to better utilization of the auto industry and increase its production from 38-43%. 

As per the research analysts at
RNCOS, “The growing automobile market offers a good scope to the foreign car manufacturers who wish to enter the Indonesian automobile market. The country has a huge population and skilled labor. This sector looks attractive, especially because the government has formulated certain plans to improve the infrastructure and incentive of foreign direct investments for the country’s progress.”

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