By now, you would probably have heard that General Motors is packing up shop in South Africa, stopping sales of its Chevrolet brand by the end of 2017 and selling its local manufacturing operations to Isuzu. But there may be one question on your mind. Why?
Well, in a global statement, GM chairperson and CEO, Mary Barra, has explained the reasoning behind the latest “restructuring actions”, which will also see the Chevrolet brand leave the Indian market at the end of the year.
“As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” said Barra.
“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.”
So, in short, Barra is saying that the return on the investment of operating in South Africa isn’t high enough.
“Globally, we are now in the right markets to drive profitability, strengthen our business performance and capitalise on growth opportunities for the long term. We will continue to optimise our operations market by market to further improve our competitiveness and cost base,” she explained.
As a result of these actions (which also include streamlining in East Africa and Singapore), GM says it expects to realise annual savings of approximately $100-million (about R1,34-billion).
Stefan Jacoby, GM executive vice president and president of GM International, echoed Barra’s sentiments.
“We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities,” said Jacoby.
GM says these decisions were made following an “extensive review” of operations international markets and reflect a series of actions taken to improve global business performance that began in late 2013.
“These actions will further allow us to focus our resources on winning in the markets where we have strong franchises and see greater opportunity,” GM president Dan Ammann added.
“We have compelling plans for growth in both the top line and the bottom line as we invest for the future,” Ammann said.