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ajor automakers are getting ready to kick off production of affordable fuel-efficient cars next month following the issuance of long-awaited tax breaks.

Astra Daihatsu Motor president director Sudirman Maman Rusdi said on Wednesday that the firm expected to start manufacturing the so-called eco-cars by mid-August once it secured government approval to access the tax breaks.

'€œWe will apply for the incentives in a few days and if the technical verification, a requirement to gain approval, goes as scheduled we'€™ll commence production after the Idul Fitri holiday,'€ he told The Jakarta Post.

Daihatsu would produce both the Ayla and Agya, models it has jointly developed with Toyota Motor Manufacturing Indonesia, and in the initial phase would produce 500 units of each per month, this could be increased according to market demand, Sudirman added.

The Ayla and Agya will be manufactured in Daihatsu'€™s new factory in Suryacipta industrial estate in East Karawang, West Java, which has an annual production capacity of 100,000 vehicles.

In a bid to spur growth in the fast-growing automotive industry and curb ballooning fossil fuel consumption, the government is providing tax incentives for local production of eco-friendly vehicles, including those driven by biofuel, hybrid and gas engines.

Following the passage of the government regulation on low-carbon emission vehicles, the Industry Ministry last week introduced another rule detailing requirements for automakers to garner tax discounts for production of inexpensive eco-cars.

To be eligible for zero sales tax, premium gasoline-driven eco-cars, with an engine capacity of between 980 cc and 1,200 cc, and diesel-powered eco-cars with a capacity of up to 1,500 cc should be able to run at least 20 kilometers on 1 liter of fuel.

The cars'€™ maximum price should be Rp 95 million (US$9,457), with a price tolerance of 15 percent higher for those equipped with automatic transmission and 10 percent higher for safety technology. They should also gradually utilize larger amounts of locally sourced materials.

The eligibility criteria for the tax incentives, will be verified by an independent surveyor appointed by the government and the incentives will be available within 12 days once the eligibility has been proven.

While Daihatsu and Toyota have long prepared themselves to take part in the program, other car manufacturers '€” Nissan and Suzuki '€” are also on their way to launching their own lines.

Yoshiya Horigame, the vice president for national sales & marketing of Nissan Motor Indonesia, confirmed his firm'€™s participation in the production of low-cost and green cars, saying they would fulfill the requirements stipulated in the rules.

He said that the manufacturing could begin next year, and Nissan would produce the eco-cars under its heritage Datsun brand. '€œWith the low-cost and green cars we aim to double Nissan'€™s current sales figure,'€ he said.

Nissan has a target of producing 200,000 units of the eco-cars by 2016, according to Indriyani Hadiwidjaja, the general manager for the Datsun business unit at the firm.

Nissan Motor Indonesia, a joint venture between Japan'€™s second-largest automaker Nissan Motor Co Ltd and PT Indomobil Sukses Internasional, sold 31,339 units in the January-June period this year,
up 9.22 percent from last year.

Nissan is slated to introduce its inexpensive eco-car in September during the annual motor exhibition, the Indonesia International Motor Show in Jakarta.