General Motors and its principal Chinese partner, SAIC Motor Corp., are teaming up to for a push into Indonesia, one of Southeast Asia’s largest markets.
SAIC-GM-Wuling, a joint venture between GM China, SAIC and Wuling Motors, announced that it plans to build a manufacturing plant on the outskirts of Jakarta to assemble Wuling brand vehicles for the country’s expanding vehicle market.
Several media reports suggest the new plant will build a small minivan at the plant with plans for it to hit the market under the Wuling banner in 2017. The factory will have the capacity to build 150,000 vehicles annually.
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.
In short: it has a big upside in terms of expansion. Eight years after shutting its Indonesian facilities, General Motors in 2013 resumed operations at its Bekasi factory in West Java with the production of the Chevrolet Spin. The seven-seat family car serves a traditionally popular category among Indonesian consumers.
Wuling, a former maker of agricultural equipment based in Southern China now controlled by SAIC-GM, builds relatively inexpensive vehicles that are now aimed at customers in rural China and in small Chinese cities.
The venture in Indonesia represents is a new step for SAIC and GM to jointly manufacture vehicles for selected Asian markets.
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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Construction of the new facility near Jakarta is targeted to begin in 2015, subject to relevant government approvals. Vehicles will be sold primarily in Indonesia, with the potential to export to other ASEAN markets in the future, GM China officials said.
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The Shanghai General Motors Wuling venture currently operates manufacturing bases in China in Liuzhou, Guangxi Zhuang Autonomous Region; Qingdao, Shandong; and Chongqing Municipality. It has been China’s leading mini-commercial vehicle producer since 2006.
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In 2009, the venture was the first vehicle manufacturer in China to sell 1 million vehicles in a calendar year. Last year, SGMW sold 1,787,931 vehicles in China, an increase of 12.8% from 2013 and an all-time record.