Mon, Feb 02, 2015 page15

• GM and SAIC to push into Indonesia with no-frills vans GM

  • Reuters, BEIJING
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  General Motors Co (GM) and Chinese partner SAIC Motor Corp (上海汽車) are set to announce a joint push of their no-frills brand Wuling (五菱) into Indonesia aimed at establishing an opening in Southeast Asia’s biggest market and then going on to tackle other markets in the region.

  They have already made moves to purchase a property in an industrial district on the outskirts of Jakarta, according to two people familiar with the matter and are expected to detail within days what GM China president Matt Tsien called an important joint venture in the nation of 240 million people.

  For GM, Indonesia would be its second market in Asia outside of China, having already broken into India with SAIC, where they cooperate to market Wuling’s small multipurpose vans.

  The move points to a thaw in what industry watchers said was a creeping chill in the two companies’ partnership over recent years.

  GM said that SAIC-GM-Wuling, which also includes Wuling Automobile Co (五菱汽車) as a stakeholder, is set to own 80 percent of the new Indonesian venture. SAIC is set to separately own the rest.

  GM owns 44 percent of SAIC-GM-Wuling, SAIC owns 51.1 percent, and Wuling owns 5.9 percent, so GM’s stake in the Indonesian venture is to be 35 percent.

  The venture aims to manufacture and market low-cost “people mover” microvans, based on the same vehicles that in China, under the Wuling brand, can sell for just under 30,000 yuan (US$4,799).

  GM already operates a sales and manufacturing company in Indonesia with a range of Chevrolet vehicles that includes a strategic compact people mover of its own, the Chevy Spin.

  Tsien said GM and SAIC saw the two brands as complementary, as they would be differentiated by pricing, product quality and features.

  Wuling’s focus is “great functionality, attractive styling and value for money,” Tsien said. “That’s the basic element that really works here in China, and we believe under SGMW’s leadership this will be quite successful in Indonesia as well.”

  Tsien said that Indonesia had a large and growing appetite for simple multipurpose vans, often with three rows of seating that can accommodate seven or eight people.

  He declined to say exactly what type of microvans they are planning for Indonesia or how they would market or price them.

  Indonesian Ministry of Trade officials told Indonesian state news agency ANTARA on Friday that GM and SAIC would invest US$700 million, with an aim to commence production in 2017 from a factory with a capacity of 150,000 vehicles per year.

  Stiff competition will come from Toyota Motor Corp and other Japanese brands, which control over 90 percent of the auto market in Indonesia.

  IHS Automotive Asia-Pacific managing director James Chao (趙英智) said the Wuling multipurpose microvans were a good fit for Indonesia, but there was plenty of work to do.

  “Creating brand awareness for a new entrant, as well as establishing a widespread and effective distribution network in a challenging geographic footprint will also be key success factors,” Chao said. “The established players in Indonesia aren’t standing still, with Toyota and Daihatsu Motor Co Ltd fiercely defending its dominating share and Nissan Motor Co and Honda Motor Co aggressively expanding their product line-up.”

  The GM-SAIC move has much in common with the strategy of Japan’s Nissan Motor Co Ltd, which has revived the Datsun brand it retired in the 1980s to market cars affordable to middle-class consumers in countries such as Indonesia, India, Russia and South Africa. Nissan began selling a Datsun in Indonesia last May starting at 87.9 million rupiah (US$6,891).

  Tsien said the new joint venture aims eventually to export out of Indonesia to neighboring markets in Southeast Asia.

  “Our relationship is stronger than ever,” he said. “It’s a very ... mutually respectful relationship. We understand each other’s interests.”

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