General motors exits Kenyan market after selling its stake to Japanese automaker
Detroit-based GM will also take away its Chevrolet franchise from GMEA as part of the termination of the alliance between the two automakers.
Announcing the takeover yesterday, GM East Africa will rebrand into Isuzu East Africa next month, marking the end of era for General Motors which founded the auto dealer in 1975 in partnership with the government.
“Isuzu Motors General Motors have reached an agreement that Isuzu will invest in General Motors East Africa. Isuzu is making this investment with the intention of expanding its commercial vehicle production and sales in Eastern Africa,” Isuzu said in a statement.
The new ownership structure will place Isuzu as the majority stakeholder alongside state-owned Industrial and Commercial Development Corporation at 20 per cent, Centum Investments at 17.8 per cent and Japanese trading company Itochu Corporation 4.5 per cent.
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The sale to Isuzu Motors will be completed after all the necessary approvals have been sought from the competitions authority and COMESA and it is expected to have no impact on jobs.
“GM has been a major investor in the Kenyan manufacturing sector over the last four decades, contributing immensely to the country’s automotive industry and economy. We thank our share holders for their tremendous support,” president and managing director of GM Africa and Middle East Operations Mario Spangenberg said.
The deal comes at a time when the dealer, whose market share currently stands at 31.5 per cent, posted a 30 per cent drop in sales in the year to December 2016, with Isuzu brands representing more than 95.6 per cent of the sales.
“It is a natural progression in terms of our business. GMEA business is structured around Isuzu commercial trucks and buses which account for over 95 per cent of our regional sales,” GMEA managing director Rita Kavashe said during the announcement.
Kavashe, who will continue as managing director under the new ownership structure, said that Isuzu is looking to tap into the regions market opportunities in the areas of infrastructure and real estate.
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Isuzu business which is truck based will be focused on the provision of light commercial buses and trucks, hopes to use GM’s vast network in the region to bring in its manufacturing capability and after sales expertise.
“We will start a wind down of Chevrolet business. In the next one year we will be selling most of the products but after sales services will continue to be provided through our network and through our facility here,” said Kavashe.
GM is now left with two other African business units: General Motors South Africa and General Motors Egypt.
Majority of Kenyan consumers rely on Bank loans in their purchases of vehicles as a result of the capping of interest rates, customers now have limited access to loans hence slowing down the industry.
Other factors that may pose a challenge to the vehicle manufacturer are the August 8 polls and the general liquidity in the market.
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