General Motors to close its plant in Indonesia

MANILA: It has been a tough few years for General Motors (GM) as it once again announces the closure of another one of its Southeast Asian Plant.

GM, the home of car brands Buick, Cadillac, GMC, and Chevrolet announced yesterday, October 28, that it will no longer operate in the Indonesian automotive market. Effective March 31, 2020, GM motors will seize all sales operations in Indonesia, as announced by GM Southeast Asia’s President Hector Villarreal.

According to Villarreal, it was not an easy decision to make, but the company eventually decided to focus on existing markets that they have successfully captured. He also acknowledged that they failed to seize the Indonesian market based on a lack of operational strategy to counter external factors stating,

“In Indonesia, we lack the scale and domestic manufacturing footprint to sustainably compete in the volume segments of the market. These factors have also made our operations more exposed to broader factors in Indonesia, like softening commodity prices and foreign currency pressures.”

The Detroit-based automobile manufacturer confirms that the company will stop selling new Chevrolet vehicles in Indonesia at the end of first quarter next year to focus its resources on “markets where there is a clear pathway to sustainable profitability”. However will continue to provide after-market services to its customers like maintenance, repair, and honor warranties.

This difficult decision will, of course, have ripple effects as it will, regrettably, “impacts a number of our small team of employees, who GM will support with an appropriate severance package and transition support. We are committed to supporting our stakeholders through the transition,” adds Villareal.

This comes on the heels of GM’s recent withdrawal from or substantially downsized operations in Thailand, Indonesia, South Korea, and India. In the Philippines, the story is not much different. Sales are also in a slump and the company’s saving grace could all rest on the Trailblazer since our local market has a propensity for pickup trucks or SUVs.

But even with the excise tax scare back in 2017 that prompts car buyers to purchase before its implementation, sales barely moved. Chevrolet only sold 5,949 units (+0.30%) in 2017, followed by a sharp decline in the succeeding year to 4,017 units (-32.48%). This year, Chevrolet has only sold 1,884 units so far from January to August.

The question now is, what would be General Motor’s next strategic move to turn things around?

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