Windhoek-American car manufacturer General Motors (GM) has announced its withdrawal from South Africa, saying it will hand over its vehicle manufacturing plants to its partners, Isuzu Motors. The Opel brand has also since been sold Peugeot.
The reason for the move, the company said, was to strengthen its international operations to drive stronger financial performance and focus its capital and resources on business opportunities expected to deliver higher returns.
GM says this means the Chevrolet brand will be phased out of Namibia, South Africa, Botswana, Lesotho, and other markets supplied through South Africa by the end of 2017.
However, South African Trade Minister Rob Davies expressed no surprise over the news, pointing out that since GM’s return to southern Africa they have been failing to produce and sell the required number of Chevrolet vehicles for southern African market.
Also, importantly, the number of Chevrolet vehicles assembled in South Africa has also been too low for GM to benefit from the SA government’s minimum production volume of 50,000 units, as required by the government’s Automotive Production and Development Programme.
The programme is one of the key trade elements in the trade agreements that South Africa has with Europe and US, as bilateral or collectively through Southern African Customs Union and Southern Africa Development Community.
“Sales have been on a downward trend for the past five years, and exports remained low at about 2,000 vehicles per annum with a maximum of 3,500 units,” Davies said.
Nevertheless, there is also the fact that the Chevrolet brand has not been the most preferred vehicle brand within the right-hand drive markets of southern Africa since the return of GM to South Africa in 1997.
The Isuzu brand had become stronger during the time GM disinvested from apartheid South Africa to comply with the America Comprehensive Anti-Apartheid Act in 1986.
And although GM were technically no longer the owners of Isuzu, they were still the legal owners of Isuzu brand dealerships in South Africa and in all countries supplied with vehicles assembled in South Africa.
Selling both the Chevrolet and Isuzu brands became a problem, as the Japanese brand has become more enduring than Chevrolet, with its American-influenced designs.
“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 GM executive vice president and president of GM International Stefan 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,” he said.
Isuzu would acquire GM’s light commercial vehicle manufacturing operation and GM will cease manufacturing and sales of Chevrolet in the domestic market, subject to local regulatory requirements.
The decision by GM to leave southern Africa and India was made following an extensive review of operations in GM International markets and reflects a series of actions taken to improve global business performance that began in late 2013, the company said.
“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.
“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,” said GM CEO Mary Barra.