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Build a factory in Indonesia? Geely Holdings statement

2024-03-03 Update From: AutoBeta autobeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)09/17 Report--

A few days ago, Indonesian Ocean and Investment Minister Luhut said that the Indonesian government hopes to attract Geely to build an electric car factory in Indonesia. Luhut revealed that the Indonesian government offered to supply Geely with nickel ore, a key raw material for electric car batteries, while Geely was "very interested" in the possibility of building a factory in Indonesia. Luhut also said that Indonesian President Joko Widodo expressed support for the plan.

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On September 17, Geely Holdings Group said in a statement: "although Geely is evaluating the development potential of Indonesia's new energy market and exploring opportunities to compete in the Indonesian market, it does not have any specific plans to invest and build a plant in Indonesia." At the same time, Geely Holdings said, "Proton has long been the most important basis for Geely's development in the ASEAN market, and Geely will continue to deepen cooperation with its strategic partner DRB-HICOM in the future to help Malaysia become an important development engine of new energy vehicles in ASEAN."

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Indonesia is a Southeast Asian country, the capital is Jakarta, with a land area of 1.914 million square kilometers and a population of nearly 280 million. Indonesia ranks first in Southeast Asia in terms of area and population. On the economic front, Indonesia's GDP in 2022 was US $131.881 billion, ranking 16th in the world, fifth in Asia, first in ASEAN, and the only one of the ten ASEAN countries exceeding US $1 trillion.

With such a huge population base and economic output and increment, Indonesia has the largest number of cars in Southeast Asia. According to the data, Indonesia sold 1.048 million cars in 2022, an increase of 18.1 percent over the same period last year, making it the largest country in Southeast Asia, but Japanese cars have an absolute advantage in Indonesia. The top five are Japanese brands, including Toyota, Daihatsu, Honda, Mitsubishi and Suzuki, of which Toyota accounts for 33.6% of the market.

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Due to the early entry into the Indonesian market, Japanese brands have been deeply loved in Indonesia. Since the 1960s, Toyota, Mitsubishi, Suzuki, Honda and Nissan have successively entered the Indonesian market to invest and build factories, and gradually established a sound sales and maintenance network. With the advantages of rich models, cost-effective, maintenance costs and after-sales service, they have occupied the dominant position in the Indonesian fuel vehicle market for several decades.

However, due to the slow electric transformation of Japanese brands, Chinese car companies have begun to speed up the layout of electric vehicles in Indonesia, but for now, electric vehicles account for a small share of the overall market. Only 10327 electric cars were sold in Indonesia in 2022, accounting for about 1 per cent of total sales.

In August 2015, SAIC GM Wuling officially entered Indonesia, with a total investment of 700 million US dollars to build a plant in Bujiaxi County, West Java Province. In July 2017, the factory was completed and put into production, and the first Indonesian-made Wuling Confero came off the line, winning the title of "New car of the year" and "Best small MPV" in Indonesia.

Chery has also invested in a plant in Indonesia and plans to launch all-electric models by the second half of 2023. Chery Indonesia Motor Co., Ltd. said that the small global SUV OMODA 5 will be put into production in Indonesia. Over the next two to three years, Chery plans to launch as many as 12 new energy models, including pure electric and hybrid vehicles, to further consolidate Chery's position in ASEAN.

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In addition to Wuling and Chery, Chinese car companies such as BAIC and Great Wall have also set up Indonesia. Therefore, Geely Holdings wants to invest in the Indonesian new energy car market and build a factory in Indonesia, which is not impossible in the future.

By contrast, Japanese brands, which already have an absolute monopoly in the fuel car market, are also laying out electric cars. According to the plan, Toyota plans to invest $1.8 billion by 2027 to strengthen production of electric vehicles and two-wheelers. Mitsubishi Motors plans to invest about $2.5 billion to expand production and accelerate the development of hybrid and electric vehicles by 2025. At present, Mitsubishi has worked with a number of Indonesian companies to promote a pure electric vehicle project.

With the rise of car electrification, Indonesia is not willing to lag behind. In its latest document, Indonesia proposes that the country's greenhouse gas emissions will be reduced by 31.9% by 2030 and will achieve the 43.2% reduction target with international cooperation. Under this goal, it is necessary to accelerate the transformation from fuel vehicles to electric vehicles. According to Indonesia's plan, only electric cars and motorcycles will be sold by 2050.

Driven by the Indonesian electric vehicle policy, Chinese electric vehicle brands have been widely and highly recognized by consumers and the government, with increasing influence and expanding market share. Indonesia is reportedly finalizing a new set of incentives to attract investment from electric car manufacturers, Indonesia's Minister of Marine and Investment Co-ordination Luhut Binsar Pandjaitan said on July 25.

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