General Motors is seeking more local suppliers for its southeast Asia operations to ensure production is naturally hedged as it seeks to make further inroads in the region, the head of GM’s Southeast Asia division said.
GM is the latest of global manufacturer seeking to beef up its presence in southeast Asia, lured by an expanding middle class in a region with nearly 600m people and a combined gross domestic product of $1.7 trillion against a backdrop of sluggish European and US markets.
“Asean is in growth mode, (our market share) has increased from 1.2% last year to 1.8% year to date. As we develop and as the market continues to show increasing wealth, we’ll be on our way (to reach) 10% market share in the not too distant future,” Martin Apfel, GM’s president for Southeast Asia, told Dow Jones Newswires in an interview.
Asean – a group that includes Singapore, Indonesia, Myanmar, Cambodia, Malaysia, Laos, The Philippines, Thailand, Vietnam and Brunei – is pushing for economic integration, including the lowering of tariffs and other barriers for auto exports.
In the past decades, much of the region’s auto investment has flowed to Thailand, lured by relatively reliable infrastructure and numerous government incentives.
But Indonesia has become more attractive in recent years because of its giant domestic market of more than 240m people and as high commodity prices boost income in the resource-rich archipelago.
“If you look the market economics, market dynamics and look at demographics, you multiply those three things, and it spells prosperity…we still like Thailand but growth trajectory is always in favor of Indonesia,” said Apfel.
“Our strategy is to build where we sell and localised (components) sourcing and be naturally hedged…we’ll work with some of our global suppliers who have operations here, but we’ll also work with local, 100% Indonesian suppliers like how we’re tapping and increasing local, 100% Thailand suppliers.”
GM unveiled Friday its $150m investment in Indonesia to build a plant with 40,000 units of annual capacity. It expects to start production of a seven-seat van by 2013. Chief Executive of GM Indonesia Marcos Purty added it may introduce GM trucks to the country in “late 2011 or early 2012.”
GM sold 2,500 units in Indonesia in the first half, up 18% from a year ago. Its sales jumped 72% to 4,500 units in 2010, representing 0.6% market share.