German carmaker Mercedes-Benz is set to bolster Indonesia’s truck market dominated by Japanese brands, as it started the local assembly of its first commercial vehicles on Tuesday.

The firm will produce heavy-duty truck Axor 2528 C in its factory in Wanaherang, Bogor, West Java run by its local subsidiary PT Mercedes Benz Indonesia (MBI).

MBI will further expand the production line of its factory, located in a 42-hectare area, with US$25 million it has allocated to reach an annual production capacity of 4,500 units in the next few years.

Markus Villinger, the CEO of PT Daimler Chrysler Indonesia, the local unit of Mercedes Benz’s parent company Daimler AG, expressed his confidence that Axor trucks would be well-received in the Indonesian market.

“The government is spending a lot of money to improve infrastructure in Indonesia. This drives demand for transportation,” Villinger said during the event marking production.

He also noted that the domestic automobile market, especially the heavy-duty truck segment, was bouncing back this year after a sluggish performance last year.

Axor trucks targets corporate buyers in the mining and construction sectors, among other fields.

Mining and construction business have received a boost in the past few months as prices of commodities, such as coal and palm oil, started to gain.

Villinger further said MBI would make a limited number of Axor trucks before scaling up, in line with growing demand.

In Indonesia, Axor trucks compete with similar products under Japanese brands, such as Isuzu, Hino and UD Trucks.

Mercedes’s experience in developing Axor in different parts of the world and its efforts to adjust the products to the Indonesian market would allow it to compete with rivals in the heavy-duty segment, said Kay-Wolf Ahlden, head of Daimler commercial vehicles’ regional center for South East Asia.

“We’re bringing something that we know will work for the market,” Ahlden said.

Axor trucks has hit the roads in its home market, Germany, as well as other countries in Latin America and the Middle East, among other regions.

Ahlden further said that local production would increase the truck’s competitiveness. Previously, MBI imported 11 Axor variants in the form of completely built units (CBU) from India following the model’s launch in March.

The locally assembled trucks will have 30 percent local content and MBI plans to gradually increase the rate. At present, it aims to focus its sales on the Indonesian market and has no plans to export.

Coordinating Economic Deputy Minister for Industry and Trade Edy Putra Irawady, who was present at the event, hoped MBI’s move to assemble Axor trucks in Indonesia would help meet the government’s target of seeing 2.5 million vehicles made locally by 2020.

The truck would also support the development of infrastructure across the country, he added. (mrc)

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