Will Auto Manufacturers Use More Local Components?

Summary

Motor vehicle manufacturers are making several adjustments after the rupiah rate slumped to Rp16,000 per US dollar. For example, they use more local components and start hedging the transaction of imported goods.

PT Honda Prospect Motor Director Yusak Billy revealed that entry-level cars, such as Honda Brio and Mobilio, had the most significant increase of local content. “At the moment, 89 percent of Honda Brio’s components are local, and we intend to keep increasing it,” Yusak said as quoted by Bisnis Indonesia. On the other hand, the head of the Association of Indonesian Automotive Manufacturers (Gaikindo), Yohannes Ngaoi, said that hedging was inevitable since the car production still needed many imported components. “But, the cost of hedging also increases,” he continued.

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