GM Indonesia Expects No Bailout

VIVAnews - General Motors Autoworld Indonesia said that it has not planned to propose bailout funds, in response to news coverage on General Motors Corporation and two other top US automotive companies attempting to seek funds.

"Sole distributors should only reduce costs that are possible to cut," said General Motors (GM) Autoworld Indonesia Managing Director Mukiat Sutikno, Wednesday, Nov 26. 

GM Corporation has taken measures since 2005, reducing production costs by 23 percent. "The percentage is equal to US$9 billion," Mukiat said.

Moreover, to handle the global crisis, according to Mukiat, GM has cut back salary increases and bonuses for executives and has renegotiated with GM labor union.

In addition, GM Indonesia said that it will continue to emphasize cost reduction to anticipate insufficient funds. "It is mainly concerned with cost efficiency on aftersales service," said GM Autoworld Indonesia Aftersales Director FA Suwadji Wirjono.

For example, initially, GM Indonesia used aircraft for distribution, and now it is using land and sea transportation. "The change may save 40 percent of the distribution costs, amounting to Rp 5 billion," said Suwadji.

Other strategies include substituting softwares and information technology that are imported directly from the United States with local products.

GM Indonesia still has not planned to cut employees.

In 2009, GM Indonesia will focus on networking and gas-based fuel vehicles aiming at commercial products like taxis. Meanwhile, by the end of 2008, it will lauch aftersales service concerning flood effects.

Although it is anticipated that GM Indonesia will face serious challenges in early second half of the year, or third quarter of 2009, Sutikno is optimistic that GM Corporation will prioritize Indonesian market. "The Indonesian market is not yet optimally managed. It only attracts 500,000 consumers," he said.

In addition, he said, the Indonesian government is constructing toll roads in Central Java, which will boost the automotive industry.


Translated by: Bonardo Maulana Wahono