Ford Plans to Add Models, Increase Share in Indonesia

Ford Motor Co. (F) will offer eight new models in the Association of Southeast Asian Nations over the next five years as it seeks to take advantage of rising vehicle sales in Indonesia.

Ford plans to add four dealerships in Indonesia by the end of the year, for a total of 40, as well as adding models to grow market share from its current 1.9 percent, PT Ford Motor Indonesia Managing Director Bagus Susanto said in an interview on Sept. 16.

“We will enter new vehicle segments,” Susanto said, without specifying which models it will release or setting a target for market share. “Adding retail outlets is also an investment even though it is not as fancy as building a plant.”

Ford’s Indonesia sales in the first eight months of 2011 rose 170 percent from a year earlier to 10,681 units, driven partly by the Fiesta subcompact, which was introduced in November and accounted for about 40 percent of vehicles sold, Susanto said. Expansion in Asia is part of Ford Chief Executive Officer Alan Mulally’s wider plan to boost annual global sales by 50 percent to 8 million vehicles by 2015.

Ford’s attention to the region follows General Motors Co. (GM), which aims to spend as much as $150 million to start producing a new model at a plant in West Java, and Toyota Motor Corp. (7203), which plans to build a second factory in Indonesia at a cost of 26.3 billion yen ($344 million).

Thailand Manufacturing

Ford vehicles sold in Indonesia are built in Thailand, where the company secured 15.5 billion baht ($506 million) worth of loans from three Thai financial institutions in July to fund a new passenger car manufacturing plant.

“Indonesia is interesting for car manufacturing,” Susanto said. “However, we want to maximize our plant in Thailand.”

Auto sales in Indonesia may grow as much as 15 percent to 850,000 units this year, Sudirman Maman Rusdi, chairman of the Indonesian Automotive Industry Association said by text message on Sept. 19. Less than 1 percent of Fiesta buyers in Indonesia have chosen the cheapest model, while the top-of-the-line model has accounted for 40 percent of its sales, Susanto said.

Ford, the second-largest U.S. automaker, expects that by 2020, 55 percent of vehicle sales will be small cars and a third of sales will be in Asia, John Stoll, a spokesman, said in an e- mail on June 7.

“Indonesia will play a significant role for Ford’s strategy in Asean,” Susanto said. The regional group is made up of 10 countries including Indonesia, Thailand and Malaysia.

Rate Boost?

Car buyers may benefit if Indonesia’s central bank lowers interest rates, as at least 60 percent of Ford customers take out loans to buy vehicles, Susanto said. Indonesia’s central bank signaled last week it may join Brazil and Turkey in cutting interest rates due to Europe’s debt crisis and a weakening U.S. recovery.

Susanto said he expects Indonesia’s auto market to keep growing in 2012. Sales of the Ford Ranger rose 68 percent in the first eight months of the year, while those of the Ford Everest rose 31 percent, he said.

“Nine years ago, Indonesians didn’t know about Ford,” Susanto said. “Now, people’s perception is changing. So many people know Ford. People starts considering Ford as one of the brands when they want to buy a car.”

To contact the reporter on this story: Femi Adi in Jakarta at fadi1@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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