GM Executive Vice President Stefan Jacoby, who oversees markets beyond the Americas, Europe and China, acknowledges GM got it wrong in going head-to-head with the Japanese in a market he dubs their "backyard".
GM tried to take on Japanese rivals by locally producing its Chevrolet Spin, a strategic, small 'people mover' van which has proved a winner in Brazil, but it was too costly to make to be profitable in Indonesia as most of the parts had to be imported.
The Spin, which sold from around $12,000 and competed with Toyota's Avanza, failed to take off as GM had hoped, making the production plant at Bekasi, just outside Jakarta, a financial burden. Production last year was less than a quarter of Bekasi's annual capacity of 40,000 vehicles. GM sold just 8,412 Spin cars in Indonesia last year, and exported nearly 3,000.
"We could not ramp up Spin production to boost the volume as we had expected ... although the product was really good," Jacoby told Reuters. "The logistics chain of the Spin was too complex; we had low volume so we could not localize the car accordingly, and from the cost point of view we were just not competitive."
GM will stop making the Spin in Indonesia by end-June and shutter the Bekasi factory, which employs around 500 people. The restructuring will leave GM Indonesia as only a sales unit.
The overhaul aims to turn GM Indonesia "not only into profitability, but into a sustainable business model," said Jacoby.
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