Having announced a wide-reaching restructuring initiative for its International Operations (GMIO) business unit, General Motors has now provided details of how it will exit the South African market.
Before getting into the transactional details, it’s vital to define GM’s operations in South Africa: the automaker markets the Chevrolet, Opel and Isuzu brands in the region while operating one assembly plant in Struandale. Though the Isuzu brand isn’t “GM proper” per se, the automaker supports the sales and service operations of Isuzu vehicles in its dealer network in the country. It also produces the Isuzu D-Max midsize pickup truck at the Struandale plant.
General Motors Actions
Now, here’s how GM will exit the South African market:
- Sell its South African light commercial vehicle manufacturing operations to Isuzu Motors
- Cease local manufacturing of Chevrolet vehicles in the South African domestic market at the GM Struandale factory by the end of 2017, subject to consultation with employees and unions, subject to regulatory requirements.
- Cease selling Chevrolet vehicles in the South African domestic market by the end of 2017
- Continue to provide service and parts support for Chevrolet customers
- Collaborate with PSA Group, the future owner of the Opel brand, to support Opel owners in the market
GM South Africa informed employees and unions of the announcements on the morning of May 18th and will begin the formal consultation process with them immediately. It has also established support centers for employees.
In addition, GM South Africa will also work closely with affected dealers on a robust transition plan. Customer support center 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 honored.
“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 Stefan Jacoby, GM executive vice president and president of GM International. “We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities.”
“These decisions were not made lightly”, said GM South Africa President and Managing Director Ian Nicholls. “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 transition as smoothly as possible.”
Isuzu has had a presence in the South African market for over 44 years. For the past four years, it has occupied the number one position in the medium- and heavy-duty commercial truck segment of the South African market.
The Japanese truck maker will do several things on its end as part of GM’s withdrawal from the market:
- Purchase the GM Struandale manufacturing plant and GM’s minority shareholding in Isuzu Truck South Africa (Pty) Limited to continue manufacturing the Isuzu KB and medium- and heavy-duty commercial trucks in Port Elizabeth. This is subject to competition regulatory approval.
- Assume control of GM’s Parts Distribution Centre and Vehicle Conversion and Distribution Centre.
- Set up its own 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,” emphasized Haruyasu Tanishige, senior executive officer for the Sales Division of Isuzu Motors Ltd. “The integration of our light commercial and medium- and heavy-duty commercial business will strengthen our base to grow here. We will do this through our focus on providing outstanding aftersales and customer support, establishing close relationships with our local partners and expanding our business.
“Isuzu is building a strong base to grow on the African continent in the long term. Evidence of this is our recent purchase of GM’s 57.7 percentage shareholding in its East African operations, 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.”
PSA Group Actions
Following the recent announcement of the sale of Opel/Vauxhall to the PSA Group, GM continues to work with PSA Group 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.