Update COVID-19 in Indonesia: 1,647,138 confirmed infections, 44,771 deaths (26 April 2021)
5 May 2021 (closed)
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General Motors Indonesia (GM Indonesia), the local unit of the US-based General Motors Company, made a loss of about USD $200 million in the years 2013-2014 due to higher operational costs while sales did not grow accordingly. The company was unable to compete with its dominant Japanese rivals, led by Toyota Motor. These were the main reasons behind the company’s decision to close its assembly plant in Bekasi (East of Jakarta) by mid-2015 (implying the dismissal of 500 employees).
Last week, GM Indonesia Executive Vice President Stefan Jacoby said that the company will continue to distribute Orlando, Captiva and Trailblazer models through dealers in Indonesia (implying that GM Indonesia becomes a sales unit), but will stop to manufacture the Chevrolet Spin (Chevy Spin), a low multipurpose vehicle, in its Bekasi plant. This move is part of a broader repositioning of the Chevrolet brand across the Southeast Asian region. GM announced it may also cease production of the Chevrolet Sonic in Thailand by mid-2015.
Indonesia is an attractive market for car manufacturers as the country is still characterized by a low per capita car ownership ratio (less than four in every 100 people own a car), while per capita GDP has been growing rapidly in the past decade. Between 2008 and 2014 car sales have about doubled to 1.2 million car units in 2014, evidencing robust demand for cars in Southeast Asia’s largest economy. However, in the period 2012-2014 car sales in Indonesia have been more-or-less stagnant amid the country’s economic slowdown, including a higher interest rate environment (Bank Indonesia raised its key interest rate gradually from 5.75 percent to 7.75 percent between June 2013 and November 2014) hence limiting people’s purchasing power.
Tough Japanese Rivals in the Indonesian Car Market
The car (sale) industry in Indonesia is dominated by Japanese car manufacturers. Market leader Toyota (of which the car units are distributed by Astra International through a jointly-controlled entity with Japan’s Toyota Motor Corporation) accounts for about half of total car sales in Indonesia. Initially, GM was confident that it would to be able to compete with these Japanese brands and therefore revived its Bekasi plant in 2013 (through a USD $150 million injection) to produce the Chevy Spin. This Bekasi plant had already been established by GM in 1995 but operations were halted in 2005 (also due to its weak market share amid Japanese domination). However, production costs of the Chevy Spin were high as most car components had to be imported. Moreover, demand for GM cars in Indonesia never took off as Indonesians prefer other brands, particularly the Toyota Avanza, Honda Mobilio, Daihatsu Xenia, and Suzuki Ertiga. The GM plant in Bekasi was operating at only a quarter of its full capacity of 40,000 vehicles per year. The company sold 8,412 Chevy Spins and exported around 3,000 in 2014. As a result, the Bekasi plant became a financial burden for GM. In total, GM only sold 10,018 vehicles in Indonesia last year, implying a market share of below 1 percent. Meanwhile, Japanese car manufacturers control over 90 percent of the market.
GM’s presence in Indonesia stretches back eight decades. Currently, six GM models are sold on the Indonesian market: Chevy Spin, Aveo, Capitiva, Orlando, Trailblazer and Colorado.
Indonesian Car Sales (CBU):
|Month||Sold Cars 2012||Sold Cars 2013||Sold Cars 2014|
|Indonesian Car Sales
(number of car units)
(number of car units)
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