GM pulls out of SA – Isuzu to remain…

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GMSA, Opel, Isuzu, Chevrolet, General Motors South Africa, General Motors

And how this will affect your Chevrolet/Opel/Isuzu going forward…

 

In a shocking revelation made today at a press conference in Port Elizabeth, General Motors South Africa announced that it would be pulling out of South Africa completely by the end of 2017.  Along with it, General Motors South Africa will be taking Chevrolet, the last of its remaining brands here after Opel was sold to PSA Group earlier this year (Isuzu is not a GM owned entity, although GM still own shares in the Japanese brand and the two share tech on certain projects).

 

It sounds massive, and it is, but the reality is that at this stage Chevrolet is the only brand to be pulling out – at least until further notice.  Isuzu will be remaining in the country, as Isuzu South Africa will be buying up portions of General Motors South Africa’s business to enable it to continue to produce and sell vehicles in the South African market.

 

Isuzu announced today that it intends to:

 

  • Purchase the Struandale manufacturing plant as well as General Motors South Africa’s minority shares in Isuzu Truck South Africa to allow Isuzu to continue building the KB and other medium- and heavy-duty trucks in Port Elizabeth. This is subject to approval by the relevant regulatory bodies.
  • Assume control of GM’s Parts Distribution Centre and Vehicle Conversion and Distribution Centre;
  • Set up its own dedicated dealer network to market, distribute and service light commercial vehicles for existing and new Isuzu customers.

Isuzu, Isuzu Delivers, Isuzu South Africa

Haruyasu Tanishige, senior executive officer for the Sales Division of Isuzu Motors Ltd. emphasised, “We are committed to the South African market.  The integration of our light commercial and medium- and heavy-duty commercial business will strengthen our base to grow here.  We will do this through our focus on providing outstanding aftersales and customer support, establishing close relationships with our local partners and expanding our business.”

 

How will this whole setup affect the relevant brands?  Let’s take a look:

 

Chevrolet – Hardest hit by General Motors South Africa pulling out

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Chevrolet will suffer the most – the brand will be the true casualty of the decision as it will cease to exist in the country.  Manufacture and supply of Chevrolets to the domestic market will be phased out by the end of 2017 and no new models will arrive (the new Chevrolet Cruze had recently been spotted locally for homologation, but this is now cancelled).

 

In the way of continued aftersales support, Ian Nicholls (MD of General Motors South Africa) says that existing warranties and service agreements will be honoured through to the end of 2017 by the existing GMSA dealer network, with continued aftersales support offered through the new network of Isuzu dealerships.  Nicholls says that he foresees a parts supply agreement of “at least 10 years”.

 

Despite the large name and heritage associated with Chevrolet, their demise is unlikely to be felt in a massive way.  The Chevrolet Spark has been one of the weakest competitors in the segment for some time now, and its 150 units sold last month aren’t massive.  The Spark was due for replacement soon anyways, as was the Cruze (56 sales last month).  The Captiva (55 units sold) won’t be missed by many – besides being a cheap 7 seater large SUV, whilst the Trailblazer (146 units in April) has failed to dent sales of the Ford Everest (414 units) and Toyota Fortuner (985 units).

 

Perhaps the biggest loss from the Chevrolet stable will be the Chevrolet Utility.  The Chevrolet Utility sold a rather hefty 764 units in April 2017 and, whilst still less than the 1191 units sold by the Nissan NP200, is the only credible rival to the Nissan.  Without the Chevy Ute in the country, Nissan will have complete control of the segment – until such time as VW launches the Saveiro locally.

 

Isuzu – The most to gain

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Isuzu seems to have found themselves better off in all this.  They plan to open a 90-dealer large network across the country (General Motors South Africa currently has around 130 dealers) through which they will sell new vehicles and service old ones.

 

However, with General Motors South Africa, and particularly Chevrolet, out the way, it will open doors for them to expand on their range of non-commercial vehicles.  With the Trailblazer gone, Isuzu will be able to locally market the MU-X.

 

This 7-seater SUV shares underpinnings with the Trailblazer, albeit with different engines and far better looks.  Pair the Isuzu underpinnings with a greater brand heritage in the country, badge it as a Frontier (the well loved rival to the Nissan Sani), and it’ll likely sell far better than the Trailblazer ever did.

 

Isuzu may also be able to negotiate a deal with General Motors to rebadge the Chevrolet Utility as an Isuzu and continue sales locally.  General Motors and Isuzu still have sharing agreements between them, enabling the Trailblazer to share Isuzu underpinnings, and Isuzu could leverage this to make the Ute available locally to provide competition for the Nissan NP200.

 

Opel – The unwanted child

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UPDATE: Opel to stay in South Africa

 

With Opel’s recent sale to PSA Group still a fresh wound for the brand, they are in perhaps the most unchartered of territories – lost in limbo with potential for either great or terrible things.

 

It is as of yet unconfirmed whether Peugeot South Africa will be handling the Opel brand going forward, however with GMSA shutting its doors, any decisions now need to be fast tracked.  Haste makes waste though, and it’s a scary position for Opel to be in.

 

General Motors South Africa has invested heavily into Opel in the last few years, bringing new product to the market and spending heavily on marketing to increase the Opel market share.  This it has done so successfully, and this year, the Opel Astra won the title of South African Car of the Year for 2017.

 

Opel South Africa will be hosting a press briefing on the 8th of June 2017 where it is likely to outline its plans going forward, but at this stage there are only 2 clear cut options – Opel will either shut its doors completely in the country, or continue sales in one form or another.

 

Speculation is rife that the former is most likely, however given the investment made by the South African contingent of General Motors and the fact that many of these people may soon be jobless, we suspect Opel will continue sales through one of three options:

 

  1. Opel joins Isuzu: Already handled by the same group of people locally, it would make sense for Isuzu South Africa to acquire the distribution rights for Opel in the country.  Using the existing dealer footprint, little would change other than Chevrolet disappearing, but the names, faces, and locations would all continue, and Opel would be able to continue selling good products and honouring current service plans, maintenance plans, and warranties.
  2. Opel joins Peugeot South Africa: With PSA Group likely looking at this option on a global scale, it makes sense that it would happen here too, especially now when General Motors has pulled out. This could fast track the enrolment of Opel SA into Peugeot SA.  However, with both brands competing for a very similar market share with similar product, PSA might not want to risk cannibalising a weak Peugeot in SA, and in turn may decide to kill off Opel locally.
  3. Opel South Africa goes standalone: This is less likely, albeit still an opportunity.  If Opel South Africa established itself as a standalone brand, it could establish bespoke dealerships that could prioritise the brand and grow it further.  However the cost of this exercise would be vast and would require substantial input from PSA Group, who might rather see Opel’s local operations absorbed into Peugeot South Africa.

 

Of course this is all speculation, and we’ll have to wait until June 8th to find out for certain, but interesting times are ahead for the Opel brand – but interesting isn’t always good.

 

Not a sign of the political times

 

Whilst this sudden cessation of operations by General Motors South Africa may reek of foreign investment being withdrawn due to political turmoil, General Motors has assured the public that it is by no means a result of South Africa’s current political climate.

 

Instead, it is part of General Motors’ global business priorities, which have seen them sell off Opel and Vauxhall, as well as cease sales in India.  General Motors are downsizing with the intent to focus on their most successful markets, which include the USA and China.  South American interests still hang in the balance, and recent political turmoil may have an impact there as to whether or not General Motors continues operations on the continent.


Watch Ian Nicholls, MD of GMSA, address the public on the matter in the video below:

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