Automotive

GM to quit car making in Indonesia due to poor sales, difficult logistics

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By Brent Balinski 27 February 2015

Editorial

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General Motors has announced that it will end car manufacturing in Indonesia after poor sales of its Spin vehicle.

Reuters reports that the Bekasi plant – which has been running since 1995 and which employed about 500 – outside of Jakarta would be closed by the end of June.

The factory made Chevrolet Spin (a mini-MPV or supermini category vehicle), which sold for about $US12,000 but proved unpopular.

Only 8,412 of these were sold in Indonesia last year, and fewer than 3,000 exported. The factory’s annual capacity was 40,000.

"We could not ramp up Spin production to boost the volume as we had expected ... although the product was really good," Stefan Jacoby, GM’s international chief, 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."

There was a poor availability of local suppliers for the Spin, and many components had to be imported.

Jacoby, who came to GM from Volvo in 2013, has been critical of the company’s scattered international production sites. He initiated the decision to close GM’s Australian manufacturing operations in December 2013.

As with Australia, GM will continue to operate in Indonesia as an import business after car assembly ends.

Elsewhere, Channel News Asia notes that several international car makers are rethinking their investments in developing countries. The article cites profits for GM Ford, Kia, Hyundai and Toyota all suffering from disappointing recent sales in countries such as Brazil, Russia and India.

Image: Getty

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