General Motors, the largest US automaker and the third biggest in the world announced recently it decided to close its production operations at a local plant in Indonesia, ceasing output of locally manufactured GM-branded autos.
The decision comes as the emerging market is dominated by Japanese brands and in the process it will also axe around 500 jobs, adding it will focus on sport utility vehicles for the market. This comes as a historic moment for the country, with the US group being eight decades ago the first automaker to build a car assembly facility in what is now Southeast Asia’s largest economy. The move also highlights the woes faced by the carmaker as it struggles to gain market share from the Japanese rivals, led by the largest carmaker in the world, Toyota Motor Corp. GM Executive Vice President Stefan Jacoby, who leads the business operations of the US giant outside the Americas, Europe and China even called the market the Japanese “backyard” – admitting GM was wrong trying to compete with them from the same level.
The decision also falls in line with the repositioning strategy of the Chevrolet brand across Southeast Asia, directing consumer attention towards the brands’ American heritage for SUVs such as the Captiva and Trailblazer. It also comes as the automaker has renewed its efforts at the low end of the spectrum, trying to compete on the market with sensible offerings that come with its Chinese partner, SAIC Motor Corp. GM’s plant in Bekasi, just outside Jakarta, produced last year less than 25% of its installed annual capacity – around 40,000 units.