General Motors to cut operations in India and South Africa as part of its plan

General Motors

General Motors prepares to stop selling automobiles in India by the end of this year and will sell operations in South Africa, the newest steps in a plan of focusing cash and engineering effort on less, more successful markets.

The Detroit automaker stated on Thursday it will take a $500 million charge in the second quarter to reorganize operations in India, Africa and Singapore. It will cancel the majority of a planned $1 billion financial investment to construct a new line of inexpensive vehicles in India.

About $200 million of the charge will be a money cost, GM stated. The moves are anticipated to save $100 million a year in a sector of GM’s international organisation that in 2016 lost about $800 million, the automaker stated.

GM President Dan Ammann informed Reuters in an interview that the most recent restructuring moves – and a series of earlier decisions to stop unprofitable markets – enable GM to focus more cash, engineering effort and senior management time on broadening where the company is strong, consisting of China and the North American pickup and SUV business, where GM has a “product onslaught coming.”

GM likewise has said it is investing about $600 million a year in efforts to develop autonomous cars and transportation services.

“What are we spending our time doing?” Ammann stated. “Are we hanging around pursuing opportunities … or all of our time fixing problems?”

GM, like its Detroit competitor Ford Motor, has found it progressively costly to contend in emerging markets beyond China. GM sold only 49,000 automobiles in India and South Africa combined in 2016.

CEO Mary Barra took a trip to New Delhi in 2015 to reveal a plan to invest $1 billion in the country to construct a new line of Chevrolet models developed as part of a Global Emerging Market vehicle program (GEM). Ever then, overall car sales in India have slumped, and GM has failed to acquire traction against incumbents like Maruti Suzuki India Ltd.

Now, the automaker plans to stop selling Chevrolet brand cars by the end of the year and will produce automobiles just for export at its remaining factory located in Talegaon. The company presently employs about 2,500 employees there.

GM stated it would keep continuing its work at its design and engineering center near Bangalore.

In a different move, the automaker plans to stop developing Chevrolet cars in South Africa and sell its South African factory to Japan’s Isuzu Motors, together with the 30 percent stake the automaker owns in a truck venture with Isuzu. Isuzu concurred in February to buy out GM’s 57.7 percent stake in a joint venture in Kenya.

GM likewise will cut a concealed number of staff at its GM International Operations headquarters in Singapore. About 200 people are present in that operation, the company informed.

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