US vehicle manufacturer General Motors (GM) on Thursday announced that it would disinvest from South Africa as part of a global restructuring process.
GM South Africa (GMSA) sells the Opel, Isuzu and Chevrolet brands in South Africa.
GM said Japanese manufacturer Isuzu Motors would acquire GM’s plant in Port Elizabeth, in the Eastern Cape, combining the operation with its existing Isuzu Trucks South Africa (ITSA) operations, in which it owned the majority stake, to form a single entity called Isuzu Motors South Africa (IMSA).
Isuzu is not a GM brand, but GMSA has built, per agreement with Isuzu Motors, the Isuzu KB one-ton pickup in South Africa for more than 40 years.
IMSA is set to continue the assembly of Isuzu trucks and the Isuzu KB pickup in Port Elizabeth.
GM added that it would cease manufacturing and sales of Chevrolet vehicles in the South African market by the end of 2017, “subject to local regulatory requirements”.
The company also noted that it would continue to work with Peugeot, in France, which earlier this year acquired Opel from GM, to evaluate “future opportunities for the Opel brand in South Africa”.
GMSA MD and president Ian Nicholls said in Port Elizabeth that GMSA’s dealer network would continue to service and support all Chevrolet, Opel and Isuzu vehicles until the end of 2017, after which a newly established IMSA dealer network would take over the responsibility for all three brands.
All service and maintenance plans would be honoured, he added.
The GMSA dealer network numbered 132 dealers, with the IMSA dealer network to include 90 dealers.
GMSA produces the Chevrolet Spark small car, the Chevrolet half-ton bakkie and the Isuzu KB one-ton bakkie in Port Elizabeth.
Production at the plant reached around 31 000 units last year, down from 41 209 in 2015.
GMSA has been building vehicles since 1926.
Nicholls said Spark and Chevrolet half-ton bakkie production would “end in the coming months”.
GMSA sold 1 203 Chevrolet passenger cars and light commercial vehicles in South Africa in April. The company sold 1 049 Isuzu KB bakkies in South Africa in April, exporting 314 units.
ITSA sold 257 trucks in South Africa in April.
Nicholls noted that GMSA would need to be “right-sized” as it became IMSA.
He said he informed the 1 500 employees of the Port Elizabeth operations on Thursday morning of GM’s decision to sell its South Africa operations.
He said he was unsure of his position in any new company, noting that his priority was to look after the needs of GMSA employees.
GM said it would honour all existing catalytic converter export contracts in South Africa.
It did not comment, however, on the possibility of extending these contracts.
The decision to discontinue GM’s operations in South Africa was driven by global business considerations and not local economic and political considerations, commented GM International VP Ritch Schaafsma.
GM International president Stefan Jacoby added that “continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities”.
“As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” said GM chairperson and CEO Mary Barra. “We are committed to deploying capital to higher return initiatives that will enable us to lead in our core business and in the future of personal mobility.”
Isuzu Motors sales division senior executive officer Haruyasu Tanishige said on Thursday that he was unwilling to divulge the value of the sale agreement between Isuzu Motors and GM.
He added that Isuzu Motors would, once fully entrenched in South Africa, explore the introduction of new products to the country, while also investigating further export opportunities for the plant.
“This presents a big opportunity for us to grow in South Africa.”
Nicholls noted that he met with Trade and Industry Minister Dr Rob Davies earlier this week to inform his department of the changes within GMSA.
The next round of discussions would focus on how the newly formed IMSA would be able to derive benefits from government’s auto support programme, the Automotive Production and Development Programme.
EAST AFRICA, INDIA
GM also announced on Thursday that it would cease Chevrolet sales in India by the end of 2017. However, its plant at Talegaon would continue as an export hub for a number of markets abroad.
The group added that Isuzu Motors would also acquire its 57.7% shareholding in GM East Africa, assuming management control. GM would also withdraw sales of the Chevrolet brand from the market.