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GM wheels out of SA after 90 years

May 18 2017 13:50
John Bowker, Bloomberg News

Johannesburg - General Motors, which initially started vehicle production in South Africa in 1926, plans to sell its manufacturing plant in the country to Japanese truckmaker Isuzu Motors as part of a worldwide reorganisation to focus on more profitable businesses.

Isuzu will take over GM’s commercial-vehicle factory in the coastal city of Port Elizabeth and will also buy the US automaker’s 30% share of a truck manufacturing joint venture, GM said in a statement on Thursday. The company didn’t disclose financial details of the transaction. GM will also stop selling Chevrolet cars in the country.

“We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities,” Stefan Jacoby, president of international operations, said in the statement.

The move comes as part of Chief Executive Officer Mary Barra’s review of the business following its plan to sell European operations to Peugeot maker PSA Group. The company also announced a scaling back of its Indian operation, which will now only be used for exports. GM sold a majority stake in its East African business in the Kenyan capital of Nairobi to Isuzu in February.

At Mary Barra’s GM, it’s profit before all else

Auto manufacturing is one of the bright spots in the South African economy, which last year expanded at the slowest pace since a 2009 recession.

The government’s auto-incentive programme has attracted companies including Toyota Motor, Volkswagen and BMW to set up and invest in factories, which produce vehicles mainly for sale abroad.

In August, a Chinese state-owned car manufacturer agreed to build an R11bn auto plant in South Africa, the biggest investment in a vehicle-production facility in the country in four decades.

After starting production of Chevrolets in South Africa in 1926, GM divested its holdings in the country in 1985 and then revived activities in 1997. GM said it is continuing to work with PSA on the prospects for the Opel brand in the country.

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