General Motors will stop selling cars in South Africa and India and halt a large chunk of its local manufacturing, the company said Thursday.
Chevrolet will exit both markets by the year’s end. Both of GM’s Indian assembly plants will remain online. The Talegaon plant will produce cars exclusively for export to Mexico, Central America, and South America. The Halol plant will be sold to GM’s Chinese joint venture partner, SAIC, after GM announced two years ago that it would shutter the plant. GM stopped all production there just three weeks earlier, according to The Times of India. Aside from building global Chevrolet models like the Cruze and Spark, the Indian plants crank out several rebadged Chinese models (Sail, Tavera, Enjoy) and the newest version of the Captiva. The Talegaon plant has a maximum capacity of 165,000 cars per year.
Isuzu is taking over GM’s position in South Africa. The Struandale plant, which builds the Spark and the compact Utility Bakkie (the South African term for pickup truck), will be sold to Isuzu along with GM’s 30 percent stake in the Isuzu truck plant at Kempston Road. Three Chevrolet models (Cruze, Captiva, Trailblazer) no longer will be imported. Opel’s five-model lineup may remain in the country, GM said, as it continues discussions with PSA Peugeot Citroën, which two months ago agreed to purchase Opel and Vauxhall.
GM also said it will pull out of the East African region by selling a 57.7 percent stake to Isuzu and trimming an unspecified number of employees in Singapore, home to the GM International Operations division that oversees all foreign markets save for South America and China.
GM’s consumer websites for both India and South Africa redirected traffic to a single page detailing the pullout in their respective markets. The company said it will keep “around 90” of the 137 Chevrolet and Opel dealers open in South Africa to sell Isuzu’s light commercial trucks and honor all warranties and service. GM did not specify how many dealers it would close in India but said they would “transition to authorized service outlets” and be offered compensation.
The Chevrolet brand was only introduced in India in 2003 after seven years of local GM production. While the 2500-plus employees at the Talegaon plant are likely to be unaffected—in March, their union signed a three-year contract—it’s possible GM may reduce or cancel its 2015 promise to invest $1 billion in Indian manufacturing as part of the company’s Global Emerging Market vehicle program designed for low-cost vehicles sold in China and Latin America. At that time, according to Hindu Business Line, GM also said it would double Indian market share to 3 percent by 2020. But current market share for the fiscal year ending March 31 is below 1 percent despite the country’s auto sales rising above three million cars. The cost of complying with India’s first ever crash-test standards, to be enacted later this year, is another major reason for GM’s pullout, which, like many major automakers, often offers obsolete cars without many modern safety or crash technologies in developing countries.
Aside from a temporary pullout during apartheid, GM has built cars in South Africa since 1926. But flat returns, a fluctuating rand, and struggling sales have dogged GM’s bottom line. Cadillac pulled out of the country in 2010. In 2016, the entire international division, which includes South Africa, posted a 15 percent yearly drop in sales to 673,499. The company will maintain manufacturing and sales operations in Kenya and Egypt.
The cutbacks are part of a broad, long-term sweep by former VW and Volvo exec Stefan Jacoby, who months after taking over the international division in 2013 announced GM would quit Holden manufacturing in Australia and pull Chevrolet from Europe. That same year, he merged two of GM’s separate North Africa and sub-Saharan-Africa divisions together and then merged the new African division with GM’s Middle East division in 2015. Jacoby wasn’t finished, as 2013 also saw GM shut down production in Indonesia, reduce production in Thailand, and reduce sales in Russia to only Cadillac and three high-priced Chevrolet models (Corvette, Camaro, Tahoe). The Saint Petersburg plant currently is idle.
GM said it wants to focus on higher-margin vehicles, particularly SUVs and crossovers, in China, the United States, and other countries “where the outlook for growth is very strong.” The company said it will record a $500 million special charge in the second quarter to pay for the wind-downs and expects to save $100 million per year.