GM’s departure from SA will hurt suppliers, says Naacam

The decision by General Motors (GM) to pull out of South Africa will “have negative consequences on component suppliers to the company’s existing Chevrolet assembly lines”, says National Association of Automotive Component and Allied Manufacturers (Naacam) executive director Renai Moothilal.

“We are obviously concerned at the announcement that General Motors will be stopping the production and sale of its vehicles in South Africa.”

Moothilal said on Friday that Naacam did not yet know how many component suppliers would be affected by GM’s shock decision, announced on Thursday.

The decision would see GM South Africa (GMSA) cease Chevrolet production and sales in South Africa by the end of 2017. Isuzu KB one-ton and Isuzu truck production would continue, under the Isuzu Motors South Africa (IMSA) banner.

Japan’s Isuzu Motors announced on Thursday that it would acquire GMSA’s Port Elizabeth plant from GM, to form IMSA.

Isuzu assembly at GMSA made up around 50% of production at the Port Elizabeth plant.

GMSA total production was well in excess of 2 000 units a month, on average.

Moothilal added that Isuzu Motors’ announcement at least offered a “silver lining” to GM’s decision to depart South Africa.

“We view this as a level of confidence shown in South Africa as a manufacturing destination. We look forward to working with Isuzu to find ways to optimise the use of South African suppliers.”

Moothilal also noted that it was Naacam’s understanding that GM exited South Africa “on the back of a weak domestic sales outlook, and a general reprioritisation of markets in terms of its global strategy.

“At the same time, the company announced its exit from India. Thus the decision seems to be more GM centric. However, we remain of the view that a flourishing domestic and regional market is vital to the long-term sustainability of the auto manufacturing sector.”

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 East African market.