General Motors is to close its Indonesian car factory after 80 years, axe 500 jobs and re-focus its branding on SUVs.
The car maker was the first to set up an assembly plant in Southeast Asia’s biggest economy and appears to have given up on trying to fight Japanese rivals for market share.
Go deeper with GlobalData
Executive vice president Stefan Jacoby, who oversees markets beyond the Americas, Europe and China, acknowledged to Reuters the company got it wrong in going head to head with the Japanese in a market he calls their “backyard”.
GM produced the Chevrolet Spin, a strategic, small people mover which although proving successful in Brazil, turned out to be too costly to make in Indonesia as most of the parts had to be imported.
The Spin failed to take off, turning the plant at Bekasi, near Jakarta, into a financial burden. Production last year was less than a quarter of annual capacity of 40,000 vehicles with just 8,412 Spin sales in 2014 with a further 3,000 models exported.
Joacoby told Reuters: “We could not ramp up Spin production to boost the volume as we had expected. The logistics chain was too complex; we had low volume so we could not localise the car accordingly, and from the cost point of view we were just not competitive.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataGM will stop producing the Spin in Indonesia by the end of June leaving GM Indonesia as only a sales unit. Reuters noted the move – part of a broader repositioning of the Chevrolet brand across southeast Asia – comes even as GM drives into Indonesia with its Chinese partner SAIC.
The partners plan to set up a manufacturing facility near Jakarta for the no-frills Wuling brand but there is no plan to take over the Bekasi plant, according to sources close to the joint venture.
Despite its long presence in Indonesia, GM sold fewer than 11,000 vehicles there last year, a market share of below 1%, according to LMC Automotive. By contrast, Toyota and its Daihatsu affiliate sold more than 578,000 vehicles and, along with other Japanese makers, control more than 90% of the market.
Reuters said GM Indonesia chief Michael Dunne is expected to leave within days to be replaced on an interim basis by chief financial officer Pranav Bhatt.
