General Motors, while retrenching in Europe, South Korea and Australia, is trying to break the Japanese stranglehold in the popular family car market in Indonesia, where it sees the next auto boom after China, a senior executive has said.
The automaker is banking on multi-purpose vehicles, sport utility vehicles and compact cars to close the gap with its Japanese rivals, Michael Dunne, who became president of the company’s Indonesian operations in September, told Reuters.
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“The most exciting thing about Indonesia is it reminds me of China about a dozen years ago, early 2000s,” Dunne, a former car consultant who was also the author of a book on General Motors’ strategy in China, told the news agency in an interview.
“Population times per capita income equals opportunity for automakers. So when you have a massive population and you have that income threshold crossing US$3,500, in country after country, without exception, that’s been a trigger of take-off.”
Despite being in Indonesia for about 30 years longer than Toyota and its affiliates including Daihatsu, GM is only a small player in southeast Asia’s biggest economy.
It sold around 12,000 cars from January to October this year, whereas Toyota sold more than 350,000.
Sales in Indonesia by some estimates are expected to double over the next three years, Reuters noted.
Since April this year, General Motors has been producing the Chevrolet Spin – a van with three rows of seats priced from IDR144m (US$12,000) – at its factory in the outskirts of Jakarta.
The country of 240m people has bought more than 1.1m vehicles so far this year, according to the latest industry data from Gaikindo.
Toyota and Daihatsu control more than half of that market and keep a tight grip on the local dealership network through their partnership with Indonesian conglomerate PT Astra International.
In response, General Motors, which is boosting its network of around 40 dealers in Indonesia, provides basic car maintenance and repairs directly to customers in their homes or offices.
The company, with a slightly more than 1% share of the Indonesian market, is open to working with a partner in future, Dunne told Reuters.
GM currently has a tie-up with SAIC Motor in China.
“I think as a starting point, get in, get established, build a brand, win customers’ enthusiasm for our brand. (Then) take a look around and say, in this phase two as we look to the future, what makes more sense for us: remain independent, form an alliance?” Dunne said.
“Everything is under consideration, what makes sense for us to grow our business in this market,” he said.
General Motors is also closely watching the development of cheap, fuel-efficient cars in Indonesia. Automakers including Toyota and Honda have spent billions of dollars this year on a new line of low-cost, green car (LCGC) models.
“It will be really interesting to see what happens with LCGCs,” Dunne said. “We would like to watch first, let the incumbents lead, see where they take it. They may create a market that we can join.”
