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Jakarta Post

Collapse of bailout spooks car owners

As the US$14 billion U

Aditya Suharmoko (The Jakarta Post)
Jakarta
Sat, December 13, 2008

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Collapse of bailout spooks car owners

As the US$14 billion U.S. auto bailout request collapsed Thursday, Indonesian owners of cars produced at General Motors (GM), Ford and Chrysler factories here began to worry about the after-sale services of their vehicles.

The U.S. House of Representatives on Wednesday approved the White House-backed bailout for the "big three" auto companies, but the proposal flunked in the U.S. Senate, leaving GM and Chrysler on the verge of bankruptcy after recently stating they will run out of cash in January.

"I'm really worried about the after-sales service of my car if General Motors folds. Will there be a guarantee the spare parts will remain available in the next three to five years?" said Atmanta, who owns a 2004 Chevrolet Aveo.

Atmanta had been following the progress of the bailout news, with the latest development a plan by the White House to use some of the $700 billion bailout earmarked for the financial sector to save the auto industry, White House spokeswoman Dana Perino said as quoted by AFP.

Another Indonesian owner of a U.S.-designed car, Merdi, said his family was in the process of selling its 2003 Ford Escape, but added that they were in no hurry to sell as they were still awaiting further developments about the proposed bailout.

"My father is planning to let go of the SUV (sports utility vehicle). But with this kind of situation it's just going to speed up the plan," he said, adding that he was concerned about a possible shortage of spare parts were the companies to fail.

General Motors Corp. and Chrysler LLC are in the most immediate danger, while Ford Motor Co. has said it does not need government help to survive the short-term, but could face collateral damage if one of its domestic rivals fell, as reported by AP.

GM Indonesia sold 1,400 units last year, far lower than Ford which sold 6,309 units. Chrysler does not have a large presence in the Indonesian car market.

GM Indonesia, however, remained upbeat about its future in Indonesia, saying it had not changed its sales strategy for the country despite GM Corp's plan to restructure its company.

"Indonesia is one of our top 11 countries on our list. We are not considering any change in our plan of introducing two new models and a relaunch of one model next year," said GM Indonesia managing director Mukiat Sutikno.

Mukiat said a plan to reopen and redevelop the company's plant in Indonesia next year remained a priority.

"Our focus for Indonesia is still on selling the Chevrolet."

GM Corp considers Indonesia one of its 11 emerging markets, along with Brazil, China, India, Malaysia, Mexico, Poland, Russia, S. Africa, Thailand and Turkey. GM Indonesia has invested US$300 million in Indonesia since 1993.

"To stay competitive we have to manufacture our own products. Importing the cars will not give us flexibility," he said. (iwp)

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