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ermany-based BMW became the first carmaker to sell a premium saloon with a diesel engine in Indonesia by introducing the BMW 520d to break a long-held barrier to diesel-powered cars in the country.

The BMW 520d is the latest of BMW models applying the Advanced Diesel technology introduced by PT BMW Indonesia after the BMW X1 sDrive20d in mid-2010 and BMW X5 in October 2010.

BMW Indonesia president director Ramesh Divyanathan said it was a perfect time to launch a diesel saloon although he admitted it was a chicken-or-the-egg question in regard to the supply of cleaner diesel fuel.

“We have decided to take the first step by providing cars with cleaner diesel engines to the Indonesian market although the fuel is not yet widely spread,” he told The Jakarta Post at the BMW 520d launch event.

“However, our energy partners have said they will increase the availability of cleaner diesel fuel,” he added, referring to state oil-and-gas company PT Pertamina, Malaysian Petronas, Anglo-Dutch Shell and French Total.

Pertamina’s general manager fuel retail marketing Region III, Hasto Wibowo, said his division, which oversees Jakarta, would make available Pertamina DEX in 20 more existing fuel stations in the capital from the current 11.

“The problem is the demand is still very low, only about 10 percent when compared to Pertamax [high performance gasoline],” he said.

Hasto said one solution was to provide a smaller container tank for Pertamina DEX at the fuel stations.

When asked for future possible competitions, Divyanathan welcomed them saying it would benefit both BMW and the customers as well as every player in general.

“We at BMW will not be complacent although we have the advantage of being the first player in providing clean diesel cars. Customers will have more choices,” he said.

“At the same time, with more models available, it will also create a better market for the fuel producers so they can further expand their markets and networks.”

According to data from the Indonesian Automotive Manufacturers Association (Gaikindo), the top three in the premium car segment grew about one-third in 2010 compared to a year earlier. Mercedes-Benz topped the list with 4,618 cars, a 33.8 percent increase from 3,450 cars a year earlier. In the second place was BMW with 1,240 units or up by 37.6 percent from 901 cars in 2009. Audi was third with 146 cars, a 32.4 percent raise from sales in 2009.

Gaikindo expects the total vehicle market to grow by 11 percent to about 850,000 vehicles this year compared to 764,710 units in 2010.

BMW spokeswoman Helena Abidin said BMW expected a double-digit growth this year without giving a forecast number.

“We believe the condition is encouraging for our growth as we are introducing 10 new models this year to the Indonesian market,” she said.

“We have introduced the M1 Coupe in January and 520d today [Tuesday] and in April we will introduce an X3 with a diesel engine.”

Helena added that other models such as the 6 Series, M3, GTS and 1 Series facelift would also be introduced later this year. “Our core models with the largest demands are the 5 Series, X5, X3 and X1.”

The 520d, which has a 1.995 liter four-cylinder diesel engine under its hood, runs at 19.2 kilometers per liter of diesel fuel. The car is offered at Rp 768 million (US$85,333) off the road.