China Kicks Off Battle for Indonesian Drivers

In face of an increasingly stagnant domestic market, some Chinese automakers have begun to look beyond the country’s borders and are accelerating their pace of overseas expansion.

One popular destination is Indonesia, where Japanese carmakers have long been dominant, with nearly 98% of the market. The Guangxi-based Wuling Motors, whose partners include state-owned SAIC Motor Corp. Ltd. and General Motors is trying to change that.

For the seven months through July, the Chinese automaker sold a total of 10,000 units in Southeast Asia’s largest country — mostly minivans — making up over 1.4% of the nation’s total car sales. That compared to only 0.5% last year.

Wuling’s first offering in the country — the Confero S minivan — is priced between $9,000 and $11,000, cheaper than most Japanese offerings.

Japanese car brands are without doubt still on top, but the business environment is changing with the rise of a new generation of consumers who are more pragmatic and view cars only as a transportation tool, said Kukuh Kumara, general secretary of the Association of Indonesia Automotive Industries.

Wuling has set its sight on gaining more of the country’s market as its factory in Cikarang, West Java, is set to increase production in the near future, with an annual goal of 120,000 vehicles.

The challenge posed by Wuling has prompted its Japanese rivals to take action. Toyota, the industry leader in the country with more than half of the market, has rolled out a plan to cut costs by at least 20% by early next year, a company executive told Caixin without disclosing further details.