TVS Motor plans $100 mln Indonesia investmen
India’s third-largest motorcycle maker, TVS Motor Co., plans to invest up to $100 million in Indonesia over the next three years to set up a production base for the region, a company official said on Monday.
TVS is the second Indian motorcycle company to tap demand for two-wheeled transport in the world’s fourth most populous nation. Bajaj Auto Ltd earlier this month announced a $50 million investment in the country’s $6 billion motorcycle market.
B.L.P. Simha, the president director of PT TVS Motor Company Indonesia, told a news conference the local arm of TVS would have the capacity to make 300,000 motorcycles a year.
“We are going start production in December. Regarding the products that we are going to launch … our plan is to be a complete 2-wheeler manufacturing company,” Simha said, adding that the company had made an initial investment of $43 million.
“The investment going up to $100 million will be (used) to (increase) the local content from 40 percent to 80 percent.”
He also said that the production capacity would be gradually increased as the domestic market demand and exports market developed.
Many global motorcycle firms such as Honda Motor Co., Suzuki Motor Corp. and Yamaha Motor Co. Ltd., which combined controls around 98 percent of the domestic market, already have production facilities in Indonesia.
Indonesia offers huge potential for motorcycle makers as there is only one motorbike for every seven Indonesians versus one in four in some neighbouring countries.
Sales in the world’s third largest motorcycle market jumped to a record 5.1 million units last year from under 1 million units in 2000, but the industry has been dented this year by high interest rates and inflation.
However, motorcycle sales have fallen by around a fifth so far this year as the industry was hit by high interest rates and weak consumer purchasing power.
Some industry experts predict sales will top 5 million again next year as interest rates are cut and inflation eases.