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GM takes on the Toyota Republic
Indonesia is Toyota country. After more than 40 years here, Toyota Motor Corp and affiliates including Daihatsu have 450 dealerships and a 54 percent share of the market.
General Motors Co has been here even longer - but has just 34 dealers and less than one percent of the market.
“We started in Indonesia in 1938. We have been so successful, we have seven-tenths of a point of market share in 75 years. Are you (kidding) me?” Tim Lee, head of GM’s international operations, said in an interview. “That is not constancy of purpose.”
Despite that daunting gap, Indonesia is too tempting a market for GM and other automakers to ignore. Emerging markets account for half the vehicles sold worldwide, and industry estimates put that figure at two-thirds by 2020, when global demand is expected to reach 100 million cars annually.
And Indonesia - along with Brazil, Russia, India, South Africa and China - has become one of the hottest emerging markets of all. The country of 240 million people bought one million cars last year, and sales by some estimates are expected to double over the next three years. The McKinsey Global Institute says an additional 90 million people will join Indonesia’s consumer class by 2030 when the country could overtake Britain to become the seventh-largest economy.
That’s focusing minds at GM, the world’s second-largest carmaker after Toyota.
GM for decades failed to come up with the right vehicles for Indonesia, which prefers simple “people mover” vans. Now, it is finally coming out with a competitive multi-purpose vehicle, the Chevrolet Spin. It has restarted an assembly plant it shuttered in 2005, and is trying to grow its sales and dealership network.
GM Chief Executive Dan Akerson said he thinks GM could grab a 7- to 10-percent share of Indonesia’s automobile market within a decade.
“I think it’s a good goal,” Akerson told Reuters in an interview in Detroit. “Why give Japanese automakers a free safe haven?”
Toyota and its sister brand Daihatsu are not taking the GM threat lightly.
Fearing GM may try to poach its dealers, Toyota-Astra Motor - a sales joint venture between the Japanese auto giant and Indonesian conglomerate PT Astra International - last year asked many of its more than 260 dealers to sign loyalty pledges. Daihatsu-Astra Motor, a joint venture between Daihatsu and Astra, resorted to a similar initiative.
Toyota and its group companies in turn pledged to spend an additional $1.2 billion in manufacturing capacity and other capital investments in Indonesia. That’s the carrot. As a stick, the Toyota team threatened to revoke the franchises of any dealer who does business with GM or other competitors.
Game on in Indonesia.
To lead its campaign in Indonesia, GM has tapped Marcos Purty, a 41-year-old back-slapping executive from the Detroit suburb of Pontiac.
“Now we’ve got a car, built here and aimed at 40 percent of the market,” Purty says of the no-frills Spin multi-purpose vehicle. “We’re finally up to bat, and we really want to make a big dent.”
GM has a history of false starts and setbacks in Indonesia. Especially damaging was its failure in the early 2000s to forge an alliance with Astra, the most powerful local player.
Chevrolets began appearing on Indonesian roads in the 1920s when the country was a Dutch colony. GM began assembling cars here in 1938 at a plant in North Jakarta before giving up the factory in the mid-1950s, even as demand for cheap, durable vehicles began perking up in post-war Southeast Asia.
GM and other Western automakers did little to meet that demand, leaving the market to Toyota. Together with its partners, Toyota Group now sells half a million cars annually in Indonesia. Toshiyuki Shiga, chief operating officer of rival Nissan Motor Co., calls Indonesia a “Toyota Republic.”
In 1971, Toyota started assembling Corollas and Land Cruisers at the Astra-owned Gaya Motor plant in North
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