X

CARmag.co.za is best viewed in Firefox or Google Chrome web browsers.

Download Firefox here
Download Google Chrome here
Feedback is welcome – good or bad! Contact our webmaster

Proposed export deal could raise stakes in GM, Delta talks

by CAR magazine on 18/07/2001

Comments: 0

General Motors is set to announce a significant export contract to Japan early next year and that might have positive spin-offs for South Africa’s Delta Motors, a company in which GM might soon hold a majority share.

General Motors is set to announce a significant export contract to Japan early next year and that might have positive spin-offs for Delta Motors, a company in which GM might soon hold a majority share.

The US company announced recently that it had started talks with Delta. The proposed deal would see the Detroit-listed company transform its shareholding status from its present minority position of 49 per cent.

GM spokesman Jerry Dubrowski said last week that talks had reached a sensitive stage and that there had been no formal decision yet.

“The immediate focus is to complete the negotiations. Until this has taken place, neither party can comment,” he said.

If the parties reach agreement, Delta will join other local manufacturers who have shifted their production focus to external markets to benefit from the Motor Industry Development Programme (MIDP) that provides incentives for companies that produce high-volume models for export markets.

If an export deal is announced, GM will have to assemble more than 20 000 units a year – a number which would give the company maximum benefit from the MIDP.

“South Africa is a potential growth market and GM intends to fully participate in growth markets around the world. We believe that SA has demonstrated significant progress and will successfully continue in the future with its progress toward peaceful democracy and economic social growth,” Dubrowski said.

An export contract would give the local company a better chance against competitors like Volkswagen SA, BMW SA, DaimlerChrysler and Ford, most of which have such contracts.

Through its shareholding in Delta, GM returned to South Africa four years ago. It has joint ventures that assemble and distribute its cars in most African nations, including Egypt, Kenya, Nigeria and Tunisia. Any positive outcome of the negotiations with Delta would increase its footprint in the SA motor industry.

It is a leading exporter of fully assembled, right-hand-drive vehicles to countries in sub-Saharan Africa, including Zimbabwe, Zambia, Mozambique, Malawi and Mauritius. It exports about 2 000 units – including Isuzu bakkies, Isuzu trucks and the Opel Astra and Corsa models – into Africa.

“Delta’s manager-owners have done an outstanding job in a difficult market and, should we decide to pursue a transaction, we would hope to retain the current management team. Over the past several years, however, the competitive landscape in SA has changed.

“Delta is now competing mostly with wholly owned global original equipment manufacturers. We feel that further integration into General Motors global organisation may strengthen Delta’s competitive position and thus allow GM to gain share in an attractive market,” Dubrowski said.