Focused and disciplined company
Much like Ford, General Motors has had a difficult time breaking into key emerging markets due to strong incumbent players. Today, the automaker announced it will cut operations in India and South Africa in an effort to focus resources on more profitable markets.
GM will stop selling vehicles in India, although exports from India to other countries will continue. Struggling to compete against rivals such as Suzuki, the American automaker is canceling most of its $1 billion investment to build a new lineup of low-cost vehicles in India, reports Reuters. Meanwhile, GM is selling the remainder of its manufacturing operations in South Africa to Isuzu Motors. Previously, GM held a 30-percent stake in a truck venture with Isuzu.
The Chevrolet brand will exit both South Africa and India by the end of this year. The brand will also withdraw from East Africa now that Isuzu has agreed to purchase the remaining shares of GM’s operations in Kenya. GM’s International Operations headquarters in Singapore will experience staff reduction as part of the overall restructuring effort, although it’s unclear how many workers will be cut. All in all, the plans are expected to save GM $100 million a year.
“As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” said GM CEO Mary Barra in a statement. “Globally, we are now in the right markets to drive profitability, strengthen our business performance and capitalize on growth opportunities for the long term.” Barra also noted GM would continue to hone its operations on a market-by-market basis to improve costs.
Of course, India and parts of Africa aren’t the first victims of GM’s downsizing efforts. A few months ago, the automaker sold its unprofitable European operations to French automaker PSA Group.
Source: GM, Reuters