GM will stop building the Chevrolet Spin in Indonesia this summer and close the plant just outside of Jakarta eliminating 500 jobs.
Weeks after announcing a new partnership with its Chinese partner, SAIC Motor Corp., to build small SUVs in Indonesia, General Motors is shuttering its car-making operations in the world’s fourth-most populous country.
The move means the loss of 500 jobs in the country as GM recalibrates its efforts to be successful in Asia. Right now, it means a move toward making more sport-utility vehicles and getting out of building cars on it’s own. The automaker was getting beaten up by Japanese makers.
“GM Indonesia is undergoing a market-driven transformation,” said Stefan Jacoby, GM executive vice president and president, GM International, in a release. “This transformation will strengthen the business and dealer network by focusing on building the Chevrolet brand and delivering a competitive, high-quality portfolio to meet the needs of customers in Indonesia.”
Several factors contributed to the decision, the automaker said, including high material costs and reduced potential to utilize the local supplier base due to limited scale. GM, which had operations in the country for 80 years, sold 11,000 vehicles in Indonesia last year. However, that sales figure gave it a marketshare of less than 1%, according to LMC Automotive.
The maker produced the Chevrolet Spin, a seven-passenger small minivan that has been successful in other markets, but cost too much to turn a profit in Indonesia.
Due to the failure of the Spin, which sold from around $12,000, the production plant at Bekasi, just outside Jakarta, was no longer necessary. GM sold just 8,412 Spins in Indonesia last year, and exported another 3,000. The plant will close this summer with GM Indonesia remaining in place only to handle sales.
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GM’s new take involves spreading the risk out among its Chinese partners. SAIC-GM-Wuling, a joint venture between GM China, SAIC and Wuling Motors, announced that it plans in early February to build a manufacturing plant on the outskirts of Jakarta to assemble Wuling brand vehicles for the country’s expanding vehicle market.
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Wuling may be a wise choice for being the lead partner in Indonesia, as it’s known for selling inexpensive cars in China’s less populous non-urban areas. GM executives have said for some time that they expected the company’s extensive operations in China to serve as a base for expansion into other parts of Asia and GM China is already one of the largest exporters of vehicles from China, shipping vehicles to markets in India, Southeast Asia and South America.
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Indonesia is an important market for a number of reasons. First, it is home to more than 250 million people, which is 80% of the size of the U.S. It is the fourth-largest country in the world and is also the world’s largest Muslim country. The country is an archipelago comprising more than 17,000 islands, but just about 6,000 of those are inhabited.