Business

General Motors to save $600m as it sells its South African operations to Isuzu Motors

On February 28th, GM agreed to sell its 57.7 percent shareholding in GM East Africa to Japanese car maker Isuzu and the consequent withdraw of the Chevrolet brand from the market.

Today, the firm announced a similar exit from the South African market after 104 years, in a move expected to save it approximately $100 million and take a charge of approximately $500 million in the second quarter of 2017.

“After a thorough assessment of our South African operations, we believe it is best for Isuzu to integrate our light commercial vehicle manufacturing operations into its African business,” said Jacoby. “We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities.”

Isuzu will acquire GM’s light commercial vehicle manufacturing and GM will cease manufacturing and sales of Chevrolet in the domestic market by the end of 2017. The assets include GM’s Struandale plant and GM’s remaining 30 percent shareholding in the Isuzu Truck South Africa joint venture, with sales through a national dealer network. Isuzu will also purchase GM’s Vehicle Conversion and Distribution Centre and assume control of the Parts Distribution Centre.

GM will continue to work with PSA Group to evaluate the future of its Opel brand in South Africa. Importantly, existing Chevrolet and Opel customers will continue to be supported in the market.

“As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” said GM Chairman 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.

“Globally, we are now in the right markets to drive profitability, strengthen our business performance and capitalize on growth opportunities for the long term. We will continue to optimize our operations market by market to further improve our competitiveness and cost base.”

The company will focus its GM India manufacturing operations on producing vehicles for export only and will transition GM South Africa manufacturing to Isuzu Motors. GM’s Chevrolet brand will be phased out of both markets by the end of 2017.

GM Executive Vice President and President, GM International, Stefan Jacoby said the company is running its GM International markets with an enterprise approach and making decisions that are best for the global business.

GM International’s HQ’s in Singapore will retain responsibility for strategic oversight of the remaining regional business and markets, including Australia and New Zealand, India, Korea and Southeast Asia. GM says it took these decisions following an extensive review of its international markets since late 2013.

“These actions will further allow us to focus our resources on winning in the markets where we have strong franchises and see greater opportunity,” said GM President Dan Ammann. “We have compelling plans for growth in both the top line and the bottom line as we invest for the future.”
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