GM plans to sell stake in East African unit to Isuzu

NAIROBI (Capital Markets in Africa) – General Motors Co on Tuesday said it plans to sell its majority ownership stake in General Motors East Africa to its Japanese partner Isuzu Motors Ltd, as the U.S. carmaker continues to streamline by exiting non-core operations.

Isuzu will acquire GM’s 57.7 percent stake in the unit in Kenya, which produces trucks under the Isuzu brand and sells imported Chevrolet-brand vehicles. More than 90 percent of the vehicles sold are Isuzu brand models. The Kenyan vehicle market is tiny, with total sales of about 30,000 vehicles a year.

Divesting the stake in the Kenyan unit is “a natural next step for this business,” and is consistent with the automaker’s broader goal of refocusing capital on more profitable markets, a GM spokesman said.

In a statement, Isuzu said the unit will become a subsidiary of the Japanese vehicle maker, and will focus on expanding sales and improving after-sales services, the latter of which is a key focus for emerging markets under its mid-term business plan through 2018.

Isuzu also markets commercial and light commercial vehicles in South Africa and Saudi Arabia. Sales in the Middle East and Africa region account for around 20 percent of annual global vehicle sales.

The company expects sales to eventually improve in the region following a slide since last year as falling oil prices have squeezed demand in the Middle East.

Under Chief Executive Mary Barra, GM is steadily overhauling and pruning operations outside the United States and China, shrinking sales volume while pushing to improve return on invested capital and profitability.

GM is in talks to sell its European operations to French automaker Peugeot SA, and has shuttered or scaled back operations in Russia, Australia, Indonesia and Thailand.

“We will continue to be ruthless in our decisions to not pursue lines of business or markets or opportunities that we don’t think can make a compelling return for us down the road, so more to come,” GM President Dan Ammann told investors at a conference in January.

Source: Reuters Africa News