End of an era – GM cites poor returns
Based on global decision
GENERAL Motors’ (GM) decision to disinvest from South Africa and stop manufacturing and sales of Chevrolet in the domestic market was based strictly on a global decision on where it believed it could get the best return on investment.
“It was not influenced by local economic or political considerations,” said Ritch Schaafsma, General Motors’ international vice-president yesterday.
“After considered assessment we determined that continued or increased investment in manufacturing in South Africa would not provide GM with the strong returns we require to support our global strategy.”
In terms of GM’s disinvestment plan, Japan-based Isuzu Motors, through newly established company Isuzu Motors South Africa, would acquire GM’s light commercial vehicle manufacturing operations in Struandale, Port Elizabeth.
It will continue manufacturing its Isuzu KB and medium commercial vehicles and heavy duty trucks in Port Elizabeth.
Isuzu Motors SA would also obtain GM’s remaining 30 percent shareholding in the Isuzu Truck South Africa joint venture and take over control of GM’s parts distribution centre and vehicle conversion and distribution centre.
GM currently has 1 500 employees in South Africa and the impact of the disinvestment on them is unclear, though it appears likely there will be some job losses.
Ian Nicholls, president and managing director of GM South Africa, said they would be entering a consultation process with employees and their representatives about the proposed restructuring and it was premature to comment on the possible outcome.
Haruyasu Tanishige, the senior executive for the sales division of Isuzu Motors, declined to comment on the investment Isuzu Motors would be making in South Africa and indicated that the volumes for the plant and the number of employees it would need had not been finalised.
GM produces the Chevrolet Spark, Chevrolet Utility and Isuzu KB bakkie at its Struandale plant.
However, the Chevrolet Spark and Chevrolet Utility will soon no longer be produced at the plant and GM’s 132 dealers will be reduced to about 90 Isuzu dealers in the restructuring.
Nicholls said they anticipated that production of the Spark and Chevrolet Utility “will end in the coming months” and GM would phase out the Chevrolet brand in South Africa.
He said GM continued to work
with the PSA Group, the French manufacturer of Peugeot and Citroën vehicles, to evaluate future opportunities for the Opel brand in South Africa.
This follows the recent sale by GM of the Opel/Vauxhall brands and GM’s financial European operations to the PSA group.
Nicholls said the service plans and warranties of all GM customers would be honoured for all three brands and its existing dealer network would provide service and after sales support to customers until the end of this year.
“From 2018 onwards, Isuzu’s dealer network will provide aftersales support and service to Chevrolet and Opel customers until the discussions with PSA have been finalised,” Nicholls said.
Tanishige said Isuzu Motors had a long-term interest in the African market and South Africa would serve as an important base.
He said the company recently purchased GM’s 57.7 percent shareholding in its East African operations, giving Isuzu Motors full management control of this operation.
“This, together with the planned integration of the local operations, is the next step in our plans to grow on this continent,” he said.
GM’s restructuring also affected India, where its Talegaon manufacturing facility will in future focus only on producing vehicles for export with GM also ceasing sales of Chevrolet in that market by the end of this year.
It will also be streamlining its regional headquarters office in Singapore.
GM said the restructuring actions were expected to realise annual savings of about $100 million (R1.31 billion).