General Motors has been here even longer but has just 34 dealers and less than 1% of the market.
We started in Indonesia in 1938. We have been so successful, we have seven-tenths of a point of market share in 75 years. Are you (kidding) me Tim Lee, head of GMs international operations, said in an interview. That is not constancy of purpose.
Despite that daunting gap, Indonesia is too tempting a market for GM and other automakers to ignore. Emerging markets account for half the vehicles sold worldwide, and industry estimates put that figure at two-thirds by 2020, when global demand is expected to reach 100 million cars annually.
And Indonesia along with Brazil, Russia, India, South Africa and China has become one of the hottest emerging markets of all. The country of 240 million people bought one million cars last year, and sales by some estimates are expected to double over the next three years. The McKinsey Global Institute says an additional 90 million people will join Indonesias consumer class by 2030 when the country could overtake Britain to become the seventh-largest economy.
Thats focusing minds at GM, the worlds second-largest carmaker after Toyota.
GM for decades failed to come up with the right vehicles for Indonesia, which prefers simple people mover vans. Now, it is finally coming out with a competitive multi-purpose vehicle, the Chevrolet Spin. It has restarted an assembly plant it shuttered in 2005, and is trying to grow its sales and dealership network.
GM chief executive Dan Akerson said he thinks GM could grab a 7-10-% share of Indonesias automobile market within a decade.
I think its a good goal, Akerson told Reuters in an interview in Detroit. Why give Japanese automakers a free safe haven Toyota and its sister brand Daihatsu are not taking the GM threat lightly.
Fearing GM may try to poach its dealers, Toyota-Astra Motor a sales joint venture between the Japanese auto giant and Indonesian conglomerate PT Astra International last year asked many of its more than 260 dealers to sign loyalty pledges. Daihatsu-Astra Motor, a joint venture between Daihatsu and Astra, resorted to a similar initiative.
Toyota and its group companies in turn pledged to spend an additional $1.2 billion in manufacturing capacity and other capital investments in Indonesia. Thats the carrot. As a stick, the Toyota team threatened to revoke the franchises of any dealer who does business with GM or other competitors.
To lead its campaign in Indonesia, GM has tapped Marcos Purty, a 41-year-old back-slapping executive from the Detroit suburb of Pontiac.