CLOSE X
Advertisement

Minister says GM exit plan 'sad but no surprise'

Industry news

Johannesburg – Minister of trade and industry Rob Davies says he has learnt of the announcement by General Motors that it will cease some of its operations in South Africa with "regret and concern".

In a statement following the announcement that GM was folding its operations and leaving South Africa, Davies said he was concerned for the numerous employees whose jobs and livelihood will be directly and indirectly affected.

Tell a friend
GM will cease production of the locally-built Utility as it pulls out of South Africa at the end of 2017, while Isuzu will take over the Struandale plant.

Department of trade and industry spokesman Sidwell Medupe said: "Minister Davies notes that the decision by General Motors is part of a broader, international strategic position by the company to exit certain markets and focus the organisation on target markets and products."

The department said the move to exit some markets was evident through, among others, the decision halt manufacturing in Australia in 2013. GM also pulled out of Europe in 2017, selling the Opel/Vauxhall brand to PSA (Peugeot-Citroen). It also closed its plants in Indonesia in 2015 and Halol, India in April 2017.

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

Davies also cited recent pronouncements by GM CEO Mary Barra that the focus of the organisation would in future be orientated towards the development and production of autonomous vehicles, electrification and connectivity.

"It should also be noted that the emerging global geo-political dynamics might have a bearing on some business decisions being made," he said, "such as the recent confirmation of additional investment in the US coupled with further move of some parts production from Mexico."

General Motors has had a presence in South Africa since 1926, under various brands such as Buick, Chevrolet, GMC, Isuzu, Oakland, Oldsmobile and Vauxhall.

Downward trend

Given the intense competition in the South African market, especially after 1994, GM has had some difficulties, including not meeting the initial annual minimum production volume of 50 000 units. Sales have been on a downward trend for the past five years and exports remained low at about 2000 vehicles a year with a maximum of 3500 units.

"Therefore while it is regrettable to see General Motors exit South Africa," Davies said, "market performance leading to cuts in profitability, coupled with recent global initiatives have created the conditions to make such a move likely.

"Although we do not welcome this decision, we believe that the future of the industry is positive as automotive industry stakeholders are finalising a master plan for South Africa with a view to growing domestic vehicle production volume and local value addition and an announcement on the final program can be expected early 2018, latest, and will cover the period post 2020."

He stressed, however, that the department would continue to work with all stakeholders to mitigate the impact of this exit.

"These initiatives include encouraging the strengthening of the presence, including vehicle assembly, of Isuzu, which has been partnering GM in South Africa," Davies said.

He said he remained confident that recently announced investments in Coega could save jobs in automotive production in the Nelson Mandela Bay Metropolitan area. He said anticipated investments and localisation by the remaining vehicle producers would have a positive effect.

African News Agency (ANA)

Like us on Facebook

Follow us on Twitter

Tell a friend
Advertisement
X