General Motors to exit East Africa with sale of stake to Isuzu

Isuzu truck on display at a General Motors East Africa show in Nairobi. General Motors is selling its entire 57.7 per cent stake in GMEA to the Japanese carmaker Isuzu. PHOTO | FILE  NATION MEDIA GROUP

By NJIRAINI MUCHIRA

In Summary

• The two automakers did not however disclose the cost of the transaction, which is awaiting regulatory approvals, but maintained it will not impact on jobs.

The auto industry in East Africa is gearing for a realignment after American giant General Motors (GM) announced its exit from the region.

The motor dealer said it will sell its entire 57.7 per cent stake in General Motors East Africa (GMEA) to Isuzu Motors Ltd of Japan, marking an end to its operations in the region spanning more than four decades.

The two automakers did not however disclose the cost of the transaction, which is awaiting regulatory approvals, but maintained it will not impact on jobs.

GMEA chairman Mario A. Spangenberg, who is also president and managing director of GM Africa, termed the sale as a natural next step for the business given that about 95 per cent of its sales in Kenya are Isuzu products.

GMEA locally assembles and sells Isuzu buses, pick-ups and trucks. The firm also sells GM Chevrolet cars.

“We are responding to a request from Isuzu, which will enable it to be fully integrated into the company and apply more focus on its brand,” he said.

Once the sale is concluded, GM is likely to withdrawal the Chevrolet franchise from GMEA which will now be known as Isuzu East Africa.

But Mr Spangenberg said Isuzu will continue to offer aftersales and service support to its Chevrolet customers.

With the acquisition, Isuzu will become the largest shareholder holding a 57.7 per cent stake. Its partners, who will retain their current shareholding, include Kenya’s Industrial and Commercial Development Corporation (ICDC) with 20 per cent, Centum Investments with 17.8 per cent and Itochu Corporation with 4.5 per cent.

The Japanese automaker said it hopes to expand its commercial vehicle production and sales in the region.

“We have planned a training programme for Kenyan staff and technical support from our mother plant to further enhance quality and production. We will also focus on the aftersales business, where we see many opportunities,” Isuzu Motor's Shinsuke Minami said.

GMEA has dominated the Kenya auto market increasing its market share to 35 per cent last year from 33.5 per cent in 2015 despite a decline in unit sales.

Latest data by the Kenya Motor Industry Association shows that GMEA maintained its market leader position in 2016 after selling 4,858 units of the 13,869 new cars sold by the entire industry. However, the units sales had dropped from 6,690 units in 2015.