Truck manufacturer Isuzu is set to take over General Motors’ assembly plant in Port Elizabeth following a decision by the American automaker to quit South Africa.
Isuzu’s senior executive officer for sales, Haruyasu Tanishige, said in addition to the plant – which is located at Struandale – the Japanese company would purchase GM’s 30% shareholding in Isuzu Truck South Africa (Pty) Limited.
Tanishige said that subject to regulatory approval, Isuzu would produce its light commercial KB range at Struandale, the deal also giving the company control of GM’s Parts Distribution Centre and Vehicle Conversion and Distribution Centre. Isuzu already produces medium and heavy commercial trucks in South Africa, using Port Elizabeth as a base.
Tanishige said Isuzu’s intention was to set up a dedicated dealer network to market, distribute and service light commercial vehicles for existing and new Isuzu customers. “We are committed to the South African market,” he said. “Integration of our light commercial and medium- and heavy-duty commercial business will strengthen our base to grow here.”
Tanishige said Isuzu’s long term aim was to build a strong base in Africa. “Evidence of this is our recent buy-out of GM’s 57,7% shareholding our joint venture in Kenya, which has given us management control of the company.
“Integrating the South African light commercial vehicle operations into our business is the next step in laying the foundation for our growth plans in the future.”
By the end of the year, GM intends to have ceased making and marketing Chevrolet vehicles locally. Making the announcement, Stefan Jacoby, the company’s president of international operations, said after a thorough assessment, he believed that it would be best if Isuzu integrated the manufacture of its light commercial KB range into its African business.
“We determined that GM’s continued or increased investment in manufacturing in South Africa would not provide us with the expected returns of other global investment opportunities,” he said.
Ian Nicholls, president of GM South Africa, said subject to consultation with employees and unions, the company would cease to manufacture and supply Chevrolet vehicles to the domestic market by the end of 2017.
“Following the recent announcement of the sale of Opel/Vauxhall to the PSA Group, GM continues to work with PSA to evaluate future opportunity for the Opel brand in South Africa. Importantly, existing Chevrolet and Opel customers will continue to be supported in the market,” he said.
Nicholls emphasised that the decision to sell had not been made lightly. “We appreciate the support that our employees, customers, dealers, suppliers, the government and other key stakeholders have given us over the many years that we have operated in this country. We will manage the changeover as smoothly as possible.”
According to Nicholls, GMSA would work closely with affected dealers on a robust transition plan. “Customer support centre resources will be expanded and all warranties and service agreements, as well as ongoing service and parts requirements for all vehicles, will continue to be honoured,” he said.
GM’s decision followed announcement of the company’s evolving strategy to focus investment and engineering efforts on profitable markets. Along with its pull-out from South Africa, the company planned to stop selling vehicles in India by the end of the year, which it said would save it about $100-million annually.
According to Dan Ammann, GM’s president, the latest restructuring moves – and a series of earlier decisions to quit unprofitable markets – would allow the company to focus more money, engineering expertise and senior management time on expanding in markets such as China and North America.
“What are we spending our time doing?” Ammann was quoted as saying in an interview with Reuters regarding the pull-out decisions. “Are we spending time pursuing opportunities or all of our time fixing problems?”
GM’s CEO, Mary Barra, said as the motor industry continued to change, the company was transforming its business. “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 capitalise on growth opportunities for the long term. We will continue to optimise our operations market by market to further improve our competitiveness and cost base,” she said.
According to a statement issued by GM, the decisions followed an extensive review of operations in the company’s international markets and reflected a series of actions taken to improve global business performance that began in 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 Ammann. “We have compelling plans for growth in both the top line and the bottom line as we invest for the future.”
According to reports, GM sold just 49 000 vehicles in India and South Africa combined last year.
