Sci-tech

Isuzu's business in South Africa

Isuzu's business in South Africa

Davies on Thursday said he has learnt of the announcement by General Motors (GM) South Africa (Pty) Ltd to cease some of their operations in South Africa with "regret and concern".

As a result of these restructuring actions, GM expects to realize annual savings of about $100 million and also incur a charge of approximately $500 million in the second quarter of 2017.

The company is also pulling out of South Africa.

Dan Ammann, GM's global president, said the restructuring actions for India announced on Thursday in essence cancels "most" of the plan GM unveiled in 2015 to invest $1 billion in India to deploy newly-designed vehicle architecture as part of a Global Emerging Market vehicle programme or GEM for short, and build a new line of low-priced vehicles in India.

The company's president and managing director, Ian Nicholls, explains that this was a global decision and Isuzu will be taking over at least half of its production. Ammann said. "Are we spending time pursuing opportunities ... or all of our time fixing problems?"

GM has been manufacturing vehicles in the country since 1926 but made a decision to cease operations as part of the company's plans of restructuring its worldwide operations to improve overall financial performance. But its market share fell to below 1 percent in the year ended March 31 from 1.17 percent the previous year - even as India's market grew 9 percent to climb above the 3 million vehicle level.

The GM Technical Centre-India (GMTC-I) in Bengaluru performs global work for GM. The company has been selling cars such as Beat, Trailblazer among others under Chevrolet brand only in India. The company now employs about 2,500 workers there. Though it is stopping sales, it said existing Chevrolet customers will continue to be supported in the market.

However, declining performance has forced GM to focus its India efforts primarily on manufacturing and exporting.

"Investment in South Africa would not provide GM with strong returns and coming out of that was the opportunity to work with our long-standing partner Isuzu and it's great that they have chose to invest in South Africa".

It added that Isuzu would also purchase 57.7% shareholding in its East Africa operations, assuming management control.

Earlier, GM India announced an investment of United States dollars 1 billion to transform its ailing operations.

"We are not giving up benefits India offers as a local cost manufacturing hub with an excellent supplier base which is extremely competitive", Stefan Jacoby, GM's chief of worldwide operations, said in an interview.

Since Barra took over GM in 2014, the one-time largest automaker in the world has taken aggressive steps to narrow its focus to China, the highly-profitable North American light truck and sport utility market, Latin America, vehicle financing and transportation services that ultimately could use autonomous vehicles. The move comes as GM is looking to focus capital and resources on opportunities expected to yield higher returns, according to a press release from the automaker.


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