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General Motors Bullish on Indonesian Market

 

By Eveline Danubrata

JAKARTA, Dec 10 (Reuters) - General Motors Co, the world's second-biggest car maker, is trying to break the Japanese stranglehold on the popular family car market in Indonesia, where it sees the next auto boom after China, a senior executive said.

Despite being in Indonesia for about 30 years longer than Japan's Toyota Motor Corp and its affiliates including Daihatsu Motor Co Ltd, the U.S. company is only a small player in Southeast Asia's biggest economy.

The U.S. company sold around 12,000 cars from January to October this year, whereas Toyota, the world's biggest car maker, sold more than 350,000.

General Motors is banking on multi-purpose vehicles, sport utility vehicles and compact cars to close the gap with its Japanese rivals, said Michael Dunne, who became president of the company's Indonesian operations in September.

"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 Reuters in an interview on Tuesday.

"Population times per capita income equals opportunity for automakers. So when you have a massive population and you have that income threshold crossing $3,500, in country after country, without exception, that's been a trigger of take-off."

Sales in Indonesia by some estimates are expected to double over the next three years.

 

 

Since April this year, General Motors has been producing the Chevrolet Spin - a van with three rows of seats priced from 144 million rupiah ($12,000) - at its factory in the outskirts of Jakarta.

The country of 240 million people has bought more than 1.1 million 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 one percent share of the Indonesian market, is open to working with a partner in future, Dunne said.

General Motors currently has a tie-up with SAIC Motor Corp 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 Motor Co 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."