General Motors is looking to challenge Toyota in Indonesia

Article by Anita Panait, on July 1, 2013

After over four decades in the country, Toyota Motor Corp. and affiliates like Daihatsu control 54 percent of the Indonesian vehicle market, with around 450 dealerships selling their products as fast as hotcakes. Indonesia could even be called as a Toyota country. On the other hand, General Motors has been in Indonesia for 75 years, but only controls around 0.7 percent of the local vehicle market, with 34 dealers carrying its products.

Tim Lee, head of GM's international operation, is not happy with the carmaker’s plight in Indonesia, telling Reuters that its current standing in the country is “not constancy of purpose.” Lee has his points; GM cannot just simply ignore Indonesia.

With Indonesia becoming as one of hottest emerging markets for vehicles – a list that also includes Brazil, China, India, Russia and South Africa -- carmakers are scrambling to cater to the growing demand in the country. Emerging markets currently account for half the vehicles sold around the world.  It is estimated that emerging markets would account for two-thirds of vehicles sold worldwide by 2020, when global demand is seen to top 100 million cars annually.

Carmakers, however, have to try more than hard to challenge the current dominance of Toyota and its affiliates in Indonesia, where consumers bought around one million vehicles in 2012. Sales in the country are also expected to double over the next three years. According to the McKinsey Global Institute, around 90 million people will join Indonesia's consumer class by 2030, when the country could surpass United Kingdom to become the seventh-largest economy in the world.

As for GM, it failed where Toyota has succeeded – selling the right vehicles for Indonesia, which has preference for simple "people mover" vans, called multi-purpose vehicles. 

It is, however, not too late for GM, which will be offering its own MPV in Indonesia – the Chevrolet Spin. GM has reopened an assembly site it closed in 2005, and is expanding its sales and dealership network in the country. GM chief executive Dan Akerson believes his company could take 7 percent to 10 percent of Indonesia's vehicle market within a decade. [source: automotive news - sub. required]

Topics: gm, toyota, indonesia

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