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Mixed fortunes: The Toyota – Hybrid Synergy Drive on display at last year’s Indonesia International Motor Show (IIMS) at the JIExpo Kemayoran. Although more hybrid cars will be showcased in the 20th IIMS, opening today, they remain a rarity on the nation’s roads. (JP/Nurhayati)
Packing an efficiency punch with the mix of fuel and electric power, hybrid cars have already caught on in other Asian nations, including Japan and Malaysia. But they remain a rare sight on Indonesia’s roads, with issues of price and the lack of incentives hanging in the balance.
Industry analysts say there is still much to be done for the development of this market segment despite glimmers of hope.
Major sole agents hail the government’s policy on the manufacturing of hybrid cars, which it is hoped will cut the consumption of subsidized fuels. However, they remain guarded about business prospects for this type of car.
“Toyota Astra Motor (TAM) is ready to support the government’s policy to produce hybrid cars in Indonesia, but a number of conditions have to be fulfilled, such as price, which is an important consideration. If the price of a hybrid car is similar to that of a Kijang Innova then it will be quite sellable, but if it costs around Rp 500 million (US$56,500) then no one will buy it,” TAM’s president director Johnny Darmawan said in Jakarta recently.
According to Johnny, hybrid cars are the most feasible option to overcome the country’s fuel crisis because of the prohibitive expense involved in creating the necessary infrastructure for gas-fueled and electric cars.
Toyota, he said, welcomed the government’s initiative to prepare tax incentives for hybrid cars, and he expected that the selling price could be approximately Rp 200 million.
Johnny added that once the government provided the required incentives then Toyota’s hybrid would initially be imported completely built up. If sales proved to be good, then it would be imported completely knocked down and finally manufactured in Indonesia.
“We can manufacture here only when the sales volume reaches the prerequisite for production, about 2,000 to 3,000 units per month,” he said.
PT Nissan Motor Indonesia’s vice president director of sales and marketing Teddy Irawan voiced a similar opinion on gauging market potential.
“If the domestic and export market of hybrid cars prove to be large enough, then the automotive industry here will automatically fulfill the demand,” he said.
“If the market exists, it is only natural that we will focus on it.”
He added that while Nissan produced hybrid cars abroad in a limited number, they were not marketed here because it was felt there was no demand yet and the price would be unacceptable to the market.
PT Honda Prospect Motor (HPM), as the authorized sole agent of Honda in Indonesia, also welcomes the government’s plan to give tax incentives to manufacturers who produce hybrid cars here.
Honda is the manufacturer who first introduced a hybrid car here with its Honda Insight, and already has a hybrid manufacturing plant in Indonesia.
“Currently we are still focusing on the low end segment, such as MPVs or cars priced at about Rp 200 million because this is a very large segment, about 70 percent. We have no plans to produce or market hybrid cars here either completely built up or completely knocked down although we have the technology in Japan,” said the company’s director for marketing and after-sales service Jonfis Fandy.
He said that Honda’s manufacturing plant here did not have the facilities for mass production of hybrid cars which required huge investment.
Riyanto, a researcher in economic and public investigation of the University of Indonesia, said that the potential for hybrids was limited by issues of cost and maintenance.
The Indonesian automotive industry calculates that the hybrid cars would have to sell for between Rp 100 million to Rp 200 million per unit due to the higher manufacturing compared to conventional or gas-fueled cars.
“It is fine that the government is discussing plans for hybrid cars to reduce the consumption of fuel, but it needs to make a proper cost-benefit analysis,” he pointed out.
Any such analysis should include selling price, the rate of fuel efficiency and service and maintenance because not all service stations are capable of handling this new technology.
Riyanto said hybrid cars would certainly be competitive if the government provided incentives on import and luxury goods taxes.
The automotive industry, in the meantime, has made clear to the government that without such incentives the price of a hybrid car would be about 50 to 60 percent higher than conventional cars.
Recently, Industry Minister MS Hidayat stated that the government would soon issue regulations to facilitate the manufacturing and marketing of hybrid cars in Indonesia.
“The government is preparing a policy of low carbon emissions as the legal umbrella for an environmentally friendly automotive industry,” he said.
The goal of low carbon emissions was the legal pillar for environmentally friendly cars, such as hybrid, gas-fueled, electric and low cost green cars, he added.
He continued that initially completely built up hybrid cars might be imported to develop the market. The market here should be educated about the advantages of hybrid car technology in traffic congestion because the electric engine kicks in when the car is stopped or driving slower than 30 kilometers per hour, above that speed the fuel engine starts to operate, he said.
“Of course there is a limit to the facilities we could provide for the import of completely built up hybrid cars because gradually they will have to be manufactured here” he said.