GM Thailand SUV production 1

As part of a move to restructure its global operations, General Motors has announced its decision to shut its Bekasi, Indonesia plant by end-June, cutting about 500 jobs in the process, and transition to a national sales company in the republic.

GM will also cease making the Chevrolet Sonic in Thailand by mid-year, and reposition the bowtie brand in some South East Asian markets as an SUV and truck maker. The news comes two years after the company decided to stop its Australian operations – production is slated to cease there in 2017.

Opened in 1995 outside Jakarta, the Bekasi plant produces the Chevrolet Spin for Indonesia and other ASEAN markets, but the seven-seater failed to garner enough sales to justify GM’s continued operation of the plant, which was idle from 2005 to 2013. GM also cites higher material costs and limited access to local parts suppliers.

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GM Indonesia president Michael Dunne is leaving the company end-February, and CFO Pranav Bhatt will serve as interim president until a permanent replacement is named.

As a national sales company, GM Indonesia will continue selling the South Korea-imported Chevrolet Orlando and Thai-imported Captiva and Trailblazer, through its dealer network.

“GM Indonesia is undergoing a market-driven transformation,” said GM international chief Stefan Jacoby. “We know this decision is disappointing for our hardworking employees in Indonesia. We will work with our teams and the local community, along with the Indonesian government, to support our people.”

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GM has been in Indonesia for eight decades, but its market share is under 1%. It sold fewer than 11,000 vehicles in the republic last year, with Jacoby telling Reuters that the company was going up against the Japanese in their “backyard” and that the Spin was too expensive to make to be profitable in Indonesia.

“We could not ramp up Spin production to boost the volume as we had expected… although the product was really good,” Jacoby 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.”

GM is planning to collaborate with Chinese partner SAIC Motor Corp to manufacture and sell low-cost MPVs in Indonesia. A new, smaller plant near Jakarta will be built for this purpose. This plant will also make vehicles for other selected Asian markets.

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Operations in Thailand will also see a restructuring – the Chevrolet Sonic will stop production at the Rayong, Thailand plant, while the brand seeks to reposition itself as an SUV and truck maker. As such, the company has pulled out from Phase 2 of the Eco Car programme.

The Spin and Sonic will be phased out in the Land of Smiles by June. GM shifted close to 26,000 vehicles last year in Thailand, giving it 3% market share.

“Around the globe, GM is focused on becoming a more customer-focused and operationally efficient company,” said GM South East Asia Operations president Tim Zimmerman. “We must accelerate the transformation of our operations in Southeast Asia, particularly Thailand given the sluggish domestic market demand, by implementing changes to increase customer satisfaction and our competitiveness, speed up all processes, and put us in a better position to achieve future growth.”