Chinese joint venture with GM to capture 10% of Indonesia's auto market

Construction began on SGMW Motor Indonesia's $ 700 million plant at Bekasi, on the eastern edge of Jakarta. Production is slated to begin in July 2017 with an annual production of 150,000 units under the minivan brand.

The process is managed by a joint venture between the Indonesian joint venture General Motors USA and SAIC Motor of China, as well as Wuling Motors. It also carries out repair of machine tools and equipment of assembly shops. SAIC owns 50 percent of the shares, while GM owns 44 percent and Wuling the remainder.

“We already know that we are familiar with Japanese brands in the Indonesian market, but the auto industry in China has made a big breakthrough for 30 years. I believe that every brand, whether from China, Japan or South Korea, will have its own market in Indonesia, ”said Xu Feiyun, President of SGMW, at a press conference in Bekashi.

Domestic vehicle sales in the first seven months of 2015 were 581,106 units, down almost 21 percent from 733,444 vehicles a year earlier. July sales totaled 55,618 units, down 39 percent from the same period last year. Toyota is the dominant brand in the country with a market share of 30 percent.

Xu said SGMW vehicles will also be exported to Southeast Asia.

“During the planning stage, we calculated the export potential of the future plant,” Xu said. "We hope to start exporting at least 10 percent of the units produced at the plant, and we can gradually increase this figure."

He identified Vietnam as one of his priority export destinations, as well as markets in Africa and India. Local automakers, with a total production capacity of around 1.9 million units, exported 107,448 vehicles in June this year, up 15 percent from last year.

Head of the Ministry of Metals, Machinery, Transport Equipment and Electronics Industry said:

“I hope SGMW can also stimulate the growth of the automotive and other ancillary industries in Indonesia, including metallurgy and plastics.”

He says SGMW sold 1.8 million vehicles in China last year, most of which were family cars and commercial vehicles.