The world's fourth largest carmaker, Volkswagen, is considering setting up a production base in Indonesia, a senior government official said today.
Budi Dharmadi, a director general at the trade ministry, said the company had expressed interest during a recent meeting with Trade Minister Fahmi Idris.
"They are interested in entering the Indonesian market. It might be in the form of investment in an assembling plant. Right now, they are still conducting a study for the possible investment," Dharmadi told Reuters.
No financial details were available.
The Indonesian automotive market is dominated by Japanese firms, with Toyota holding the number one spot in terms of sales. Toyota, along with Honda, Nissan, Daihatsu, Mercedes-Benz and BMW have production bases in the country.
Vehicle sales in the world's fourth most populous nation plunged by around 40 percent last year after the government more than doubled domestic fuel prices in October 2005.
Sales reached a record high 533,910 units in 2005 before dropping to 318,883 units last year. Analysts and industry experts predict volume may reach 350,000-400,000 units this year.