On 18 May the Trade and Industry Minister responded to the decision by General Motors South Africa (Pty) Ltd (GM) to exit South Africa.
The Minister noted that the decision by GM was part of a broader, international strategic position by the company to exit certain markets and focus the organisation on target markets and products, evident through recent activities such as:
- Exiting Australia in 2013 where there was a joint venture with Holden.
- Pulling out of Europe in 2017(Opel / Vauxhall brand sold to Peugeot SA)
- Closure of a plant in Indonesia in 2015.
- Plant closure in Halol, India in April 2017.
Recent pronouncements by General Motors CEO Mary Barra that the focus of the organisation will 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 such as the recent confirmation of additional investment in the US coupled with further moves 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. Given the intense competition in the South African market, especially after 1994, GM has had some difficulties including:
- The GM plant not meeting the initial annual minimum production volume of 50 000 units set under the Automotive Production and Development Programme (APDP) since 2013,
- Sales have been on a downward trend for the past 5 years, and
- Exports remained low at about 2 000 vehicles per annum with a maximum of 3 500 units.
Therefore, whilst it is regrettable to see GM exit South Africa, 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 programme can be expected in early 2018 latest and will cover the period post 2020, according to the Minister.
He stressed that the dti would therefore 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. The Minister also expressed confidence that recent announced investments in Coega should save jobs in automotive production in the Nelson Mandela Bay Metropolitan area, and that anticipated investments and localisation by the remaining vehicle producers would have a positive effect going forward.