The decision by General Motors (GM) to pull out of South Africa will “have negative consequences on component suppliers to the company’s existing Chevrolet assembly lines”, says National Association of Automotive Component and Allied Manufacturers (Naacam) executive director Renai Moothilal.
“We are obviously concerned at the announcement that General Motors will be stopping the production and sale of its vehicles in South Africa.”
Moothilal says Naacam does not yet know how many component suppliers will be affected by GM’s shock decision, announced in May.
The decision will see GM South Africa (GMSA) cease Chevrolet production and sales in South Africa by the end of 2017. Isuzu KB one-ton and Isuzu truck production will continue under the Isuzu Motors South Africa (IMSA) banner.
Japan’s Isuzu Motors announced that it will acquire GMSA’s Port Elizabeth plant from GM to form IMSA.
Isuzu assembly at GMSA made up around 50% of production at the Port Elizabeth plant.
GMSA’s total production is well in excess of 2 000 units a month, on average.
Moothilal adds that Isuzu Motors’ announcement at least offered a “silver lining” to GM’s decision to depart from South Africa.
“We view this as a level of confidence shown in South Africa as a manufacturing destination. “We look forward to working with Isuzu to find ways to optimise the use of South African suppliers.”
Moothilal also notes that it is Naacam’s understanding that GM is to exit South Africa “on the back of a weak domestic sales outlook, and a general reprioritisation of markets in terms of its global strategy.
“At the same time, the company announced its exit from India. Thus, the decision seems to be more GM-centric. However, we remain of the view that a flourishing domestic and regional market is vital for the long-term sustainability of the auto manufacturing sector.”
GM also announced in May that it will cease Chevrolet sales in India by the end of 2017. However, its plant at Talegaon will continue as an export hub for a number of markets abroad.
The group adds that Isuzu Motors will also acquire its 57.7% shareholding in GM East Africa, assuming management control. GM will also withdraw sales of the Chevrolet brand from the East African market.