Daihatsu to Consider Cars Cheaper Than Ayla for Emerging Markets

Daihatsu Motor Co. (7262) is considering cars priced even lower than its Ayla hatchback for emerging markets to fend off competition from automakers targeting first-time buyers in countries such as Indonesia.

“We need to be able to make cars even cheaper” than the Ayla, Masanori Mitsui, president of Daihatsu, told reporters in Ikeda, Japan, where the company affiliated to Toyota Motor Corp. (7203) is based. He declined to say how much the Ayla will cost.

Daihatsu joins automakers such as Nissan Motor Co. (7201), which this month revived its Datsun brand after three decades, in targeting first-time buyers in emerging markets. Daihatsu has said the Ayla will be introduced in Indonesia after the government implements a policy to give tax breaks and incentives to manufacturers of small, fuel efficient cars.

“The demand for low-cost entry level vehicles will continue to grow as the economy develops,” Mitsui said yesterday. “So the Ayla we are introducing this time won’t be enough.”

The Ayla was designed to meet the Indonesian rules that include fuel efficiency of at least 20 kilometers per liter of gasoline and local assembly. Daihatsu will also produce a version of the Ayla for Toyota called the Agya.

The new program comes as Indonesia is set to overtake Thailand as Southeast Asia’s biggest car market next year, according to forecasts from industry researcher IHS Automotive.

Faster Growth

Demand for cars in Indonesia, with a population almost twice Japan’s 127 million, is projected to expand faster than in China over the next seven years as growth in Southeast Asia’s biggest economy accelerates. Low cost green cars could account for more than 35 percent of the 1.8 million passenger vehicles expected to be sold by the end of the decade, according to IHS.

Daihatsu and Toyota currently account for about half of the Indonesian market, according to Mitsui. While the Daihatsu Ayla and Toyota Agya are set to be the first to benefit from the program, Nissan’s Datsun will introduce the first car meeting the requirement in Indonesia in the first half next year.

Sales in Indonesia accounted for 22 percent of Daihatsu’s revenue in the year ended March, followed by Malaysia with 11 percent, according to data compiled by Bloomberg. Its home market, Japan, contributed 66 percent, the data shows.

Nissan Chief Executive Officer Carlos Ghosn this month unveiled the 1.2-liter five-door Datsun Go in India and the company said it will be priced less than 400,000 rupees ($6,700).

Daihatsu will continue to work with Toyota when trying to enter other emerging markets, Mitsui said. Southeast Asian countries besides Indonesia and Malaysia may be the markets they will target next, and there’s also demand in South Africa and Brazil, he said.

To contact the reporters on this story: Masatsugu Horie in Osaka at mhorie3@bloomberg.net; Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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