Mitsubishi Motors to invest $600mn in Indonesian car factory

JAKARTA: Japan's Mitsubishi Motors Corp will invest $600 million to set up its first multi-purpose vehicle factory in Indonesia, aiming to capitalise on strong demand for the segment in the country as well as to export to other markets in Asia.

Multi-purpose vehicles or MPVs accounted for more than half the 1.23 million cars sold in Indonesia in 2013. Often known as people carriers, larger versions can seat up to eight passengers.

The assembly plant is expected to start production in 2017 and will help Mitsubishi Motors to raise its annual production capacity in Indonesia to 240,000 vehicles from 160,000 currently, Mitsubishi Motors Chief Executive Osamu Masuko told reporters in Jakarta.

Mitsubishi Motors expects to export 20,000 MPVs per year to other countries, mainly Thailand, the Philippines and Vietnam. It does not plan to produce this particular type of car in Japan. "In Japan, it is very difficult to increase domestic sales because our population decreases every year," Masuko said.

"While in Indonesia its population still increases every year, so in the future the Indonesian market will become bigger and bigger." Mitsubishi Motors, owned 10.1 percent by Mitsubishi Corp , currently manufactures commercial vehicles at a plant in Jakarta owned by Mitsubishi Corp and local partners.

Foreign investment in Indonesia appears to be picking up on hopes of reform after Joko Widodo was elected president of the country of around 240 million people.