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Toyota Motor Corp. (TM) plans to invest ¥30 billion ($388 million) for building an assembly plant in Indonesia in order to tap demand from the fast-growing Southeast Asian market. With the addition of the plant, the automaker’s production capacity in Indonesia will nearly double to 200,000 vehicles per year.

The new plant will be built adjacent to its existing factory in the Jakarta suburb of Karawang, which will also be expanded by the automaker in two years. The plant will start operations from the first half of 2013 and is expected to assemble three subcompact models, including a low-priced strategic vehicle that is under development for the Indonesian market.

In May, Toyota announced that it would invest ¥16.5 billion ($200 million) for expanding its automobile production capacity at its Karawang plant by 40% in order to meet the rising domestic demand. Karawang plant is the only plant of the automaker in the country.

The automaker will enhance annual capacity from 100,000 vehicles presently to 140,000 vehicles by early 2013 at the plant. It will help the automaker manufacture a new vehicle and employ more workers at the plant.

The plant manufactures the Avanza sedan, Kijang Innova, Fortuner sport utility and other bigger vehicles. It exports vehicles to Thailand, the Philippines, South Africa and the Middle East.

Toyota commands roughly 60% of the Indonesian market. However, it faces tough competition from other automakers, including Daihatsu Motor Co., Nissan Motor Co. (NSANY) and Suzuki Motor. As a result, the automaker intends to improve its cost competitiveness through increased local production.

Toyota, a Zacks #3 Rank (Hold) company, posted a profit of ¥1.16 billion ($14.21 million) or 37 yen cents per share for the first quarter of its fiscal year ended June 30, 2011, which plummeted from ¥190.47 billion ($2.33 billion) or ¥60.74 per share a year ago.

The sharp fall in profit was attributable to the substantial decline in vehicle sales all over the world, especially North America and Europe due to disruptions in the supply of parts caused by the earthquake and tsunami in Japan on March 11.

Toyota expects revenues to be flat at ¥19.0 trillion for fiscal 2012 compared with the prior year. It has also lowered its guidance for operating income and net income for the fiscal year by 3.9% and 4.5% to ¥450 billion and ¥390 billion, respectively.

 
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