Does this signal a shift of the automotive industry?
GM to stop sales in India, exit South Africa
“As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” GM Chairman and CEO Mary Barra said in a statement. “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."
General Motors said early Thursday it will stop selling vehicles in India — one of the world’s largest sales markets — and will sell its South Africa business to Isuzu Motors Ltd. as it aims to focus capital in areas that can drive stronger financial performance.
The moves follow several others in recent years by the Detroit automaker to exit markets it sees as unprofitable. GM’s International Operations, aside from China, have been a drag on the company’s earnings for several years. GM shares were down slightly in pre-market trading.
In India, GM will continue to build vehicles at its plant in Talegaon, but for export only to Mexico and Central and South America. GM said it will withdraw its global Chevrolet brand from India and South Africa by the end of the year.
“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 said in a statement.
The Detroit automaker had planned to invest heavily in India, but said the change came after an extensive review of GM’s International Operations including in India that began nearly a year ago. Last month, GM stopped manufacturing at its Halol Assembly Plant in India. It also has a technical center that performs global work for GM and it is unaffected by the announcement.
In 2015, GM said it would invest $1 billion in India to produce 10 new Chevy vehicles over five years. At the time, GM was banking on doubling its market share by 2020, when analysts predicted India would become one of the world's three largest auto markets globally.
“In India, our exports have tripled over the past year, and this will remain our focus going forward,” GM International President Stefan Jacoby said in a statement. “We determined that the increased investment required for an extensive and flexible product portfolio would not deliver a leadership position or long-term profitability in the domestic market.”
In South Africa, GM said Isuzu will buy GM’s Struandale plant in Port Elizabeth, its 30 percent shareholding in the Isuzu Truck South Africa joint venture and a GM distribution center. Isuzu also will assume control of a parts distribution center in the country. GM had had a presence in the region since 1913 and began making vehicles there in 1926.
“We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities,” Jacoby said in a statement.
GM said the actions will save it $100 million annually. In the second quarter, GM will take special charges of about $500 million for the actions.
In the past few years, GM has opted to pull its Chevrolet brand largely from Europe; opted to leave Russia; cease manufacturing in Indonesia and Australia; restructure in Thailand; and just last month announced it would cease operations in Venezuela after government authorities seized its lone factory there.
“As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” GM Chairman and CEO Mary Barra said in a statement. “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.
“Globally, we are now in the right markets to drive profitability, strengthen our business performance and capitalize on growth opportunities for the long term.”