Indonesia is emerging as the next promising auto market in Southeast Asia and Volkswagen is looking to have an early shot at what could became a cash cow in the coming years.
The move was proposed by the VW Group to the Indonesian president Mr. Susilo Bambang Yudhoyono during his visit to Germany this March. According to Otomotif.kompas.com, the construction of the new factory would commence sometime next year.
It is reported that, in order to stay competent, VW is looking to source significant percentage of components locally. Two vendors are said to have been shortlisted already.
Mr. Andrew Nasuri, CEO VW Indonesia stated that the cars to be built at the Indonesian facility will be strictly adhering to European standards. He added that the upcoming plant would be a production hub for the Southeast Asian markets.
Mr. Nasuri also told that the Indonesian market would play a vital role in VW Group's mission of becoming number one automaker in the world by 2018.
VW has entered into a partnership with the Indomobil Group for the Indonesian operations. Around 60 acres of land has reportedly been acquired for the plant already by the local partner.
Setting up a production unit in Indonesia would help VW to have a better presence in the domestic market. It would also make it easy for the German car maker to participate in the Low Cost Green Car (LCGC) program.