Company has spent the last year in detailed market research and testing

A year after setting up a wholly-owned Indonesian subsidiary, Tata Motors, on Tuesday,launched three models for the local market : the Tata Aria, Tata Safari and Tata Vista.

The auto sector in Indonesia has been particularly buoyant, registering 25 per cent growth in 2012, when a record 1.12 million cars were sold.

However, Tata Motors’ formal entry into the market comes at a time when a widening current account deficit, and weak external demand for Indonesia’s commodities have led to slowing growth. Recent weeks have seen the Indonesian currency depreciate dramatically. A fuel price hike in June, and spiking interest rates are also likely to depress the car market further.

Nonetheless, Biswadev Sengupta, President Director of PT Tata Motors Distribusi Indonesia, as the Indonesian subsidiary is called, remains optimistic. In an interaction with The Hindu at the launch function here, he pointed out that Indonesia was still a growing market, alluding to the 12 per cent growth in the auto sector so far this year

Tata Motors faces a formidable challenge here. The Indonesian market has long been dominated by heavyweight Japanese players who have a stranglehold on it. Toyota, for example, has a joint venture with local firm PT Astra that controls about half of Indonesia’s market. A day before the Tata launch, both Toyota and Daihatsu introduced new compact hatchbacks, the Agya and Ayla, which Tata’s Vista will have to take head on.

Tata Motors has spent the last year in detailed market research and testing, the results of which led to the choice of the three cars launched today [Tuesday].

A specially-designed Tata Nano Indonesia is in the offing, and is likely to be launched by next year. It will feature automatic transmission rather than the manual gearbox of its Indian avatar. Indonesians overwhelmingly prefer to drive automatic cars.

Mr. Sengupta said the next few years would be about building brand awareness and customer relationships.

He did, however, confirm the establishment of five dealerships. Tata Motors hoped to ramp this up to 15 by March. He also revealed that the company planned to have “six or seven of its models on Indonesian roads” by then, including a mix of passenger and commercial vehicles.

Once a “critical mass” of sales is reached, Mr. Sengupta said, the next logical step would be to set up an assembly plant from which to export to the ASEAN region, in addition to selling locally.

“We are very clear,” he concluded, “that within the next 3-4 years, Indonesia will become our largest market outside of India. It’s going to happen.”

More In: Industry | Business