Mercedes Benz Indonesia has launched assembly of its ML350 SUV at its plant in Bogor, West Java.
Claus Weidner, chief executive of M-B Indonesia, said the new line was developed with an investment of up to US$38.41m.
"As we introduced the third generation of the M-class this June, we received a great response from customers. I am convinced that we've made the right decision to localise assembly for this model in Indonesia which will be of the same high quality and perfection as those produced in other countries."
Local SKD assembly will also allow Mercedes to offer competitive pricing. Under the current tax regime, the shift from the import of CBU to SKD allows a reduction in price as the manufacturer only pays import duty of 10%.
The Indonesian plant, which has been in operation since 1987, also assembles C-class, E-class and S-class model.
Engineering deputy director Ary Tjahyono said that, in the initial phase, the new assembly line would assemble three ML350s a day until the end of the year.
He added: “Next year, we will increase the utilisation rate of the line as we further assess the market's response to the ML."
With 3,700 sales last year, Mercedes dominated the total premium car market with a 53% share, according to the statistics of the Indonesian Automotive Industry Association (Gaikindo).
Indonesia's automobile industry is expecting annual car sales to hit 1m by the end of the month, with a total 1.1m estimated for the full year, an all-time high.