General Motors to exit South African market by end of 2017

Chevrolet Beat car on an assembly line at the General Motors plant in Talegaon

Chevrolet Beat car on an assembly line at the General Motors plant in Talegaon

American auto major General Motors on Thursday made a decision to stop selling its vehicles in India as there was no turnaround in its fortunes here after struggling for over two decades to make a mark.

Before the business transfer, Isuzu will purchase from GMSA a 30% equity stake in ITSA, which assembles and distributes Isuzu commercial vehicles, whereby Isuzu will transform the company into its wholly-owned subsidiary with a new company name of "ISUZU MOTORS SOUTH AFRICA (Tentative)".

"Our decision in India is an important milestone in strengthening the performance of our GM International operations and establishing GM as a more focused and disciplined company", Jacoby added.

Dan Ammann, GM's global president, said the restructuring actions for India announced on Thursday in essence cancels "most" of the plan GM unveiled in 2015 to invest $1 billion in India to deploy newly-designed vehicle architecture as part of a Global Emerging Market vehicle programme or GEM for short, and build a new line of low-priced vehicles in India. It will likely need those resources more as a seven-year growth period of USA industry sales comes to an end.

General Motors is reducing its footprint in India. "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". GM continues to work with PSA Group to evaluate future opportunity for the Opel brand in South Africa. The decision comes at a time when India is set to become the world's third largest auto market in the next three to four years with passenger vehicle sales expected to cross five million units annually from the current three million plus units.

GM also has said it is investing about $600 million a year in efforts to develop autonomous vehicles and transportation services.

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"I am pleased that as of this year we will be able to start selling Volvos that are Made in India", Volvo Cars CEO Hakan Samuelsson said in a news release. The hedge fund holds 54.8 million GM shares, or about 3.5 percent of the total.

DA's spokesperson on trade and industry, Geordin Hill-Lewis, said GM's withdrawal was just one of a growing list of foreign investors who are losing confidence in South Africa's struggling economy. The automaker sold only 29,000 vehicles in India a year ago.

What happens to GM India vehicle owners?

The company said its customer support centre will remain open and all warranties and service agreements, as well as ongoing service and parts requirements for all vehicles, will continue to be honoured. That plan has been scrapped as part of a bigger rethink of global operations.

"Globally, GM firmly believes there are opportunities where it can achieve greater return on investment - in specific vehicle segments and markets where the outlook for growth is very strong", GM said in a statement issued by its operations in South Africa.

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