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 While GM will still sell cars like the Cruze sedan in parts of
Southeast Asia, an emerging markets battleground for global
automakers, it is shifting focus to push the 'American heritage' of
its SUVs and pickups such as the Trailblazer and Colorado.
The restructuring - under Executive Vice President Stefan Jacoby,
who oversees markets beyond the Americas, Europe and China - marks a
retrenchment in Asia by the U.S. automaker. While business grows in
China, the world's biggest autos market, GM has struggled in other
parts of its international operations unit, which doesn't include
China.
The Detroit-based automaker has signaled overall restructuring
charges of about $700 million this year, and said last month it
expected an improved consolidated operating performance from
Jacoby's International Operations unit.
GM's Thai plant in Rayong, an industrial city southeast of Bangkok,
will be scaled down from current annual capacity of 180,000
vehicles. The company did not elaborate, but said it would initiate
a "voluntary separation program" for staff. In total, GM employs
around 3,200 people in Thailand.
In Indonesia, GM said on Thursday it would cease production of the
Chevrolet Spin by end-June and shutter a factory at Bekasi, just
outside Jakarta, which employs around 500 people.
JAPANESE DOMINATION
After eight decades in Indonesia, GM's market share is below one
percent, according to LMC Automotive. It sold fewer than 11,000
vehicles there last year, while Toyota Motor <7203.T> and its
Daihatsu <7262.T> affiliate shifted more than 578,000 vehicles.
Toyota and other Japanese makers together control more than 90
percent of the Indonesian market.
Jacoby acknowledged GM got it wrong in going head-to-head with the
Japanese in a market he dubs their "backyard". The Spin, a
strategic, small "people mover" van that has done well in Brazil,
was too costly to make to be profitable in Indonesia as most of the
parts had to be imported.
"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."
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In Thailand, GM sold close to 26,000 vehicles last year, giving it 3
percent market share, according to LMC Automotive, which puts the
combined market share of major Japanese rivals at more than 60
percent. GM said it will phase out sales of the Spin and the Sonic
in Thailand by June.
While GM is broadly repositioning the Chevrolet brand in parts of
Southeast Asia, it is driving into Indonesia with its Chinese
partners, including SAIC Motor Corp. They plan to set up a
manufacturing facility near Jakarta for their no-frills Wuling
brand, but aren't interested in taking over GM's Bekasi plant, a
person close to the joint venture said.
The overhaul in Indonesia and Thailand follows GM's 2013 retreat
from car production in Australia, and industry analysts now expect
GM to restructure its manufacturing operations in South Korea, a big
production hub for the U.S. firm.
Susquehanna Financial Group analyst Matthew Stover said South Korea
has shifted from a developing-market cost structure over the last
decade to being almost as expensive for car production as Japan.
"I don't think what's happening in Korea is even close to (being)
done. It's the biggest problem," Stover said.
(Reporting by Norihiko Shirouzu in Beijing and Ben Klayman in
Detroit; Editing by Ian Geoghegan)
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