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GM's exit from SA: Five things you should know

Industry news

It’s the end of an era following Thursday’s announcement that General Motors will be pulling out of the South African market, while handing its Port Elizabeth-based manufacturing operations over to Isuzu Motors.

While it represents a sad ending to a long and rich manufacturing history that dates all the way back to 1926, it also comes with very major implications for employees, existing vehicle owners and potential buyers. Here’s what we currently know.

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All Chevrolet products, including the locally-made Utility, will be pulled from the market.

The local factory is safe for now

Isuzu Motors has stated its intention to buy GM’s light commercial vehicle manufacturing operations, based in Struandale, as well as GM’s minority shareholding in Isuzu Truck SA.

Isuzu plans to continue the local manufacture of the its KB bakkie as well as the brand’s medium and heavy-duty trucks. Isuzu will also set up its own dealer network in SA.

Almost two years ago GMSA and Isuzu Trucks signed an agreement to strengthen their cooperation and pave the way for production of the next-generation Isuzu KB bakkie, with a view to increasing localisation as well as boosting volumes and exports. At the time GMSA’s Ian Nicholls said that the move would be “positive for employment” in the long term.

Even though GM is now out of the picture, there is every reason to believe that Isuzu will work towards the aforementioned objectives, especially given that the company has just put its money where its mouth is while very clearly stating that this is the “next step” in laying the foundation for its future growth plans, which includes the rest of Africa too.

But what about the short-term production losses at the plant? 

The Chevrolet Utility and Spark (which will be discontinued this year) collectively accounted for over 1000 units a month and it remains to be seen whether Isuzu would ramp up local production in the short term, or instead wait for the next-generation bakkie. This could certainly result in job losses. Dealers could also be left in the lurch, as could many employees at GM's headquarters as Isuzu (and a resurgent Opel) are unlikely to take up all the slack.

No more Chevrolets under sunny SA skies

With General Motors essentially pulling out of the country, the Chevrolet brand will be disappear from our market completely.

This means you can say goodbye to the locally-made Spark budget hatch and Utility compact bakkie, as well as the imported Cruze sedan and hatch as well as Captiva and Trailblazer SUVs. Nissan’s NP200 will now have the compact bakkie market all to itself.

The Trailblazer (which is already based on the Isuzu KB) is likely to return at some point, however, as an Isuzu MU-X.

Opel will make some kind of comeback

Opel was once one of South Africa’s most popular brands, but in recent years it has withered into low-volume obscurity as Chevrolet took centre stage as GMSA’s focal brand.

But now the German brand looks set to stay on in SA as an importer, with GM stating that it “continues to work with (new owner) PSA to evaluate future opportunity for the Opel brand in South Africa.”

The obvious choice would be for Peugeot South Africa to take up the reins, although nothing official has been announced at this stage. We have also heard rumours that another importer might take over the Opel brand. Peugeot SA has also been downsizing in recent times, having discontinued the Citroen brand locally in order to “focus on Peugeot”. Yet it remains to be seen whether the latter will hold true, or if that was just a decoy for some grand Opel plan that it’s keeping under wraps.

Either way, local buyers will get to enjoy Opel's latest product onslaught, which has seen it introduce a modern range of crossovers, including the Crossland X and Grandland X (pictured above).

GM has promised to look after existing customers

Chevrolet has said that it will continue to provide service and parts support for Chevrolet customers, but has not elaborated on that point or stated for how long this would be the case. Meanwhile, Opel owners would presumably need to turn to whichever importer takes responsibility for their brand. GM has promised that “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.”

Furthermore, GM said it would would work closely with affected dealers on a “robust transition plan.”

The writing was on the wall

In March this year General Motors announced that it had sold Opel to PSA (which owns Peugeot and Citroen).

Since it had already discontinued the Chevrolet brand in that region, this meant that GM was essentially pulling out of Europe altogether, with a very clear intention of cutting all the fat as it evolved into a slimmer organisation focused only on highly profitable ventures. With that kind of corporate ruthlessness at play, what was to stop them from pulling the plug on a small, low-volume operation on the southern tip of Africa with no meaningful export operations involving GM products?

On top of that, GMSA's sales figures, particularly in the case of Chevrolet and Opel brands, have been worryingly low in recent months.

As mentioned, GMSA had been strengthening its ties with Isuzu in recent years, while its parent company had been severing them. Interestingly, Mazda will be outsourcing its next BT-50 from Isuzu, which even opens the door to it being produced in South Africa.

GM doesn’t see investment potential in SA

GM’s executive vice president Stefan Jacoby put it quite bluntly: "We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities."

GM CEO Mary Barra said: “As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company. 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.”

Also read: 'We smell a rat' says Numsa on GM's SA exit

IOL Motoring

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