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A new player in Indonesia's automotive industry - backed by big carmakers from China and the USA - is eager to compete for market share in Indonesia. On Tuesday (11/07) SGMW Motor Indonesia inaugurated its first manufacturing facility in Cikarang (West Java). This local company is a joint venture between (1) SAIC Motor Corporation Ltd, a Chinese state-owned automotive design and manufacturing company headquartered in Shanghai, (2) General Motors Company (GM), a US multinational automotive corporation headquartered in Detroit, and (3) Liuzhou Wuling Automobile Industry Co Ltd, a China-based car manufacturer.
Together, these forces from China and the USA will try to break the dominating position of Japan in Indonesia's car market. Indonesia is known as the backyard of Japanese car manufacturers and Japanese car brands are indeed the most popular cars in Southeast Asia's largest economy, Toyota being the market leader.
In full-year 2016 a total of 1.06 million cars were sold in Indonesia, rebounding after two years of falling car sales in the domestic market. Monthly car sales figures released by the Indonesian Automotive Industry Association (Gaikindo) show that the rebound continues into 2017 (see table below). Therefore, car sales in Indonesia may touch 1.1 million this year. Considering per capita car ownership is low in Indonesia, there remain plenty of opportunities for further growth in the years ahead. SGMW Motor Indonesia earlier stated that it wants to control 10 percent of the Indonesian car market by 2022, an ambitious target.
SGMW Motor Indonesia (also known as Wuling Motors) is to manufacture the Confero S vehicle at its first plant in Indonesia. This multi-purpose vehicle (MPV) can carry up to seven people. The MPV is, by far, the most popular vehicle in Indonesia. This market is led by the Toyota Avanza and Daihatsu Xenia.
Indonesians love the MPV - often called "people carriers" - because these vehicles are bigger and taller than most other car types. Indonesians need a big car because they tend to have big families and enjoy taking trips with the family (and/or invite some friends). Car manufacturers are aware of high MPV demand in Indonesia and therefore continue to launch new (and improved) models. With functionality in check, manufacturers now particularly focus on improving the design of the MPV to entice Indonesian consumers.
Xu Feiyan, President Director of SGMW Motor Indonesia, said that the construction of the manufacturing facility shows the company's long-term commitment to contribute to growth of the Indonesian economy, particularly in the automotive industry. It is estimated that about 3,000 local workers will be needed at the 60-hectare plant in Cikarang. The factory is designed to be able to produce up to 120,000 vehicles per year. The facility, which required about USD $700 million worth of investment, consists of a manufacturing plant and a supplier park. Constructed had started in August 2015.
Indonesian Car Sales (CBU):
Tuesday's inauguration of the plant was witnessed by Indonesian Vice President Jusuf Kalla, Industrial Minister Airlangga Hartarto, and West Java Governor Ahmad Heryawan. Hartarto added that SGMW Motor Indonesia will also be working with 20 local component manufacturers and 15 international component manufacturers that Wuling brought to Indonesia.
In terms of shareholder composition in the join venture, SAIC Motor Corporation Ltd controls 50 percent, GM controls 44 percent, while Wuling owns the remaining shares.
The Confero S is currently being showcased at the 2017 Jakarta Fair expo that runs between 9 June and 16 July 2017. The price for the basic Confero S vehicle is IDR 130 million (approx. USD $9,775), a competitive price on the Indonesian market.
Wuling Motors Commercial: