Honda to build 4th local motorcycle factory

Astra Honda Motor (AHM) says it will invest Rp 3.13 trillion (US$340 million) to build a motorcycle factory in the Bukit Indah Industrial Estate in Karawang, West Java.

Construction of the plant, the firm’s fourth in Indonesia, would begin in the first half of 2012 and the firm aims to start production in the second half of 2013, AHM executive vice president director Johannes Loman said on Tuesday.

AHM, a joint venture between the world’s largest motorcycle maker, Japan-based Honda Motor Co., and local conglomerate PT Astra International, plans to manufacturer 1.1 million motorcycles at the plant initially before reaching a total annual production capacity of 5.3 million units.

“This plant will focus on producing scooters, the sales of which have risen greatly in the past years and have contributed significantly to our total sales,” Loman told The Jakarta Post in a telephone interview.

Loman said that scooters, which have been driving AHM’s growth, accounted for more than 50 percent of current sales and would account for 55 percent to 57 percent of estimated sales once the new plant opens.

“This new production facility will help us a fulfill rising demand for scooters in line with the nation’s quickly expanding motorcycle market, particularly scooters,” Loman said.

Last year, AHM sold 2.3 million scooters, he said, out of a total sales of 4.27 million motorcycles, up 25 percent from 2010.

The firm also had a 53 percent share of the nation’s motorcycle sales market, which booked sales of 8.01 million units in 2011, a new record, up 8.7 percent from a year earlier.

AHM, in which Honda Motor and Astra International each have a 50 percent stake, has targeted to increase sales 7.7 percent to 12.4 percent in 2012.

The Indonesian Motorcycle Industry Association (AISI) previously said that motorcycle sales in the nation might top 9 million units this year.

The new factory will join AHM’s other factories in Cikarang, West Java, and in Sunter and Pegangsaan, North Jakarta.

The new plant would employ 3,000 workers, adding to the 18,000 workers currently employed at the other factories, Loman said.

The motorcycle market in Indonesia, the world’s third-largest two-wheeler market, still offers enormous room for growth, as the ratio of motorbike owners to residents is one unit per seven people.

Indonesia’s ratio is much lower than those of neighboring countries, which have ratios of one unit to every three people, according to AISI.

Motorcycle sales, along with car sales, are used as key indicators of consumption in Indonesia, as they are mainly desired by the nation’s burgeoning middle class.

Car sales have also seen an upward trend in recent years, with last year recording a new high for sales of 894,180 units, up 20 percent from 2010, according to the Indonesian Automotive Industry Association (Gaikindo).

Optimism for continued growth in motorcycle sales has been driven by increased consumer demand created by the nation’s stellar economic performance in the last year.

Indonesia’s economy, the largest in Southeast Asia, grew 6.5 percent last year, one of the highest rates in Asia, according to the Central Statistics Agency (BPS).