Monday, 22 May 2017
GM to cut operations in South Africa and India
General Motors Co plans to quit selling vehicles in India by the end of this year and will sell operations in South Africa, the latest steps in a strategy of focusing cash and engineering effort on fewer, more profitable markets. GM plans to stop building Chevrolet vehicles in South Africa and sell its South African factory to Japan's Isuzu Motors Ltd, along with the 30 percent stake the U.S. automaker owns in a truck venture with Isuzu Motors. Isuzu agreed in February to buy out GM's 57,7 percent stake in a joint venture in Kenya.
GM also will cut an undisclosed number of staff at its GM International Operations headquarters in Singapore. About 200 people work in that operation, the company said.
The Detroit automaker said on Thursday it will take a $500 million charge in the second quarter to restructure operations in India, Africa and Singapore. It will cancel most of a planned $1 billion investment to build a new line of low-cost vehicles in India. About $200 million of the charge will be a cash expense, GM said. The moves are expected to save $100 million a year in a sector of GM's global business that last year lost about $800 million, the company said.
GM President Dan Ammann told Reuters in an interview that the latest restructuring moves - and a series of earlier decisions to quit unprofitable markets -- allow GM to focus more money, engineering effort and senior management time on expanding where the company is strong, including China and the North American pickup and SUV business, where GM has a "product onslaught coming". GM also has said it is investing about $600 million a year in efforts to develop autonomous vehicles and transportation services.
GM, like its Detroit rival Ford Motor Co, has found it increasingly expensive to compete in emerging markets outside of China. GM sold just 49,000 vehicles in India and South Africa combined last year. Since Barra took over GM in 2014, the one-time largest automaker in the world has taken aggressive steps to narrow its focus to China, the highly-profitable North American light truck and sport utility market, Latin America, vehicle financing and transportation services that ultimately could use autonomous vehicles.
Now, GM plans to stop selling Chevrolet brand vehicles by the end of the year and will produce vehicles only for export at its remaining factory in Talegaon. The company currently employs about 2,500 workers there.