-General Motors sees China-like take-off in Indonesian car market

Reuters

By Eveline Danubrata

JAKARTA, Dec 10 (Reuters) - General Motors Co, theworld's second-biggest car maker, is trying to break theJapanese stranglehold on the popular family car market inIndonesia, where it sees the next auto boom after China, asenior executive said.

Despite being in Indonesia for about 30 years longer thanJapan's Toyota Motor Corp and its affiliates includingDaihatsu Motor Co Ltd, the U.S. company is only a smallplayer in Southeast Asia's biggest economy.

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

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

"The most exciting thing about Indonesia is it reminds me ofChina about a dozen years ago, early 2000s," Dunne, a former carconsultant 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 forautomakers. So when you have a massive population and you havethat 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 doubleover the next three years.

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

The country of 240 million people has bought more than 1.1million vehicles so far this year, according to the latestindustry data from Gaikindo.

Toyota and Daihatsu control more than half of that marketand keep a tight grip on the local dealership network throughtheir partnership with Indonesian conglomerate PT AstraInternational.

In response, General Motors, which is boosting its networkof around 40 dealers in Indonesia, provides basic carmaintenance and repairs directly to customers in their homes oroffices.

The company, with a slightly more than one percent share ofthe Indonesian market, is open to working with a partner infuture, 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, builda brand, win customers' enthusiasm for our brand. (Then) take alook around and say, in this phase two as we look to the future,what makes more sense for us: remain independent, form analliance?" Dunne said.

"Everything is under consideration, what makes sense for usto grow our business in this market," he said.

General Motors is also closely watching the development ofcheap, fuel-efficient cars in Indonesia. Automakers includingToyota and Honda Motor Co have spent billions ofdollars this year on a new line of low-cost, green car (LCGC)models.

"It will be really interesting to see what happens withLCGCs," Dunne said. "We would like to watch first, let theincumbents lead, see where they take it. They may create amarket that we can join."

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