AUTO INDUSTRY

US vehicle manufacturer General Motors (GM) has announced that it will 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 says Japanese manufacturer Isuzu Motors will 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 owns the majority stake, to form a single entity called Isuzu Motors South Africa (IMSA).

Isuzu is not a GM brand, but GMSA has built, by agreement with Isuzu Motors, the Isuzu KB one-ton pick-up in South Africa for more than 40 years.

IMSA is set to continue the assembly of Isuzu trucks and the Isuzu KB pick-up in Port Elizabeth.

GM adds that it will 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 notes that it will 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 says GMSA’s dealer network will continue to service and support all Chevrolet, Opel and Isuzu vehicles until the end of 2017, after which a newly established IMSA dealer network will take over the responsibility for all three brands.

All service and maintenance plans will be honoured, he adds.

The GMSA dealer network comprises 132 dealers, with the IMSA dealer network to include 90 dealers.

Production
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 says Spark and Chevrolet half-ton bakkie production will “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 notes that GMSA will need to be “right-sized” as it becomes IMSA.

It is estimated that about 600 jobs will be lost within GMSA.

Nicholls says he is unsure of his position in any new company, noting that his priority is to look after the needs of GMSA employees.

Components
GM says it will honour all existing catalytic converter export contracts in South Africa.

It has not commented, 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, comments GM International VP Ritch Schaafsma.

GM International president Stefan Jacoby adds that “continued or increased investment in manufacturing in South Africa will 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,” says 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 says he is unwilling to divulge the value of the sale agreement between Isuzu Motors and GM.

He adds that Isuzu Motors will, once fully entrenched in South Africa, explore the introduction of new products into the country, while also investigating further export opportunities for the plant.

“This presents a big opportunity for us to grow in South Africa.”

Nicholls notes that he met with Trade and Industry Minister Dr Rob Davies in May to inform his department of the changes within GMSA.

The next round of discussions will focus on how the newly formed IMSA will be able to derive benefits from government’s auto support programme, the Automotive Production and Development Programme.

GM also announced in May that it will cease Chevrolet sales in India by the end of 2017. However, its plant at Talegaon will continue as an export hub for a number of markets abroad.

The group adds that Isuzu Motors will also acquire its 57.7% shareholding in GM East Africa, assuming management control. GM will also withdraw sales of the Chevrolet brand from the market.