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T Toyota Motor Manufacturing Indonesia (TMMIN) has started producing its all-new Vios at the company'€™s plant in Karawang, West Java, as it is gradually moving its production base from Thailand to Indonesia.

The company, which usually imports the Vios from Thailand, has spent Rp 2.5 trillion (US$205 million) in initial capital on its expansion here.

TMMIN president director Masahiro Nonami said the persistently strong demand for cars in Indonesia, driven by its growing middle-class segment, had attracted his company to make the country a Vios production base.

'€œWe see Indonesia as one of the most important markets for automotive products among other Southeast Asian countries,'€ he told a press conference at the plant on Wednesday, the first day of the local production of Vios'€™.

'€œThe Vios production base in Karawang can absorb some 500 workers to our plant,'€ he said.

The company plans to produce 1,000 Vios every month.

Currently, local auto parts constitute some 60 percent of Toyota'€™s cars and the company plans to increase the amount of local auto parts for its cars to 70 percent next year, according to Nonami.

'€œCurrently, we have approximately 100 auto part suppliers, with local companies constituting some 20 percent of the suppliers, while the remaining 80 percent are made up of Japanese and joint venture companies,'€ he said.

According to Nonami, Toyota currently contributes 87 percent to Indonesia'€™s automotive sales figures and the company hopes to increase its contribution to 90 percent with the local production of Vios'€™.

He added that thus far, his company had yet to determine whether to export the Vios, as it was still formulating strategies to increase its domestic sales figures.

Toyota seeks to gradually shift its production base from Thailand to Indonesia and hopes to move its entire production base to the latter some time in 2014.

The car manufacturer also plans to start locally producing the Toyota Yaris, which it also currently imports from Thailand, next year.

Toyota Motor Thailand '€” Toyota'€™s Thailand unit '€” sold 516,086 units there last year, or about 37 percent of the Kingdom'€™s total domestic car sales, The Nation reported.

Toyota dominated the Indonesian auto market, booking 405,414 units sold here last year, or 36 percent of total domestic car sales, according to data from the Association of Indonesian Automotive Manufacturers (Gaikindo). The sales figure was 30 percent higher than the previous year.

'€œAlthough Indonesia is a very attractive market for automotive products, some problems in the country, such as traffic gridlock, high production costs and increasing minimum wages, need to be addressed to attract more automotive companies here,'€ Nonami said.

According to Nonami, Toyota may increase its annual car production in Indonesia by around two- to three-fold if the country improves its infrastructure, for example, by reducing the dwelling time at Tanjung Priok Port, North Jakarta.

The port'€™s long dwelling time has been blamed for Indonesia'€™s industrial inefficiency and high logistics costs. (ogi)