Artwell Dlamini
3 December 2008
Johannesburg — GENERAL Motors SA (GMSA) says its ailing US parent, General Motors (GM), is expected to decide soon on whether to sell off the Hummer vehicle brand.
The parent company is struggling to raise cash and cut costs.
Stevan Koch, president and MD of GM African operations, said yesterday he expected the decision on Hummer to be made early next year.
"Hummer is our principal export," said Koch of GMSA , which is the only site in Africa that produces the brand. Hummer is also manufactured in various countries in Europe, the Middle East, Latin America and Asia Pacific.
It is unclear at this stage what the implications of the likely sale might mean for GMSA, which makes 8000 Hummers a year for the export market . For the local market, GMSA supplies about 1200 vehicles.
Much depended on who acquired Hummer, Koch said. If a buyer had manufacturing facilities, they might choose to produce the vehicle themselves. But if a buyer was an investment company they might need a manufacturer such as GMSA or someone else. He expected anyone who ended up with the brand to "take care" of customers.
Koch said the local operation had already begun a "strategic review" to assess whether it was still worthwhile exporting Hummers.
He said the Automotive Production and Development Programme, which would replace the Motor Industry Development Programme in 2012, was driven by how large export volumes were.
The Hummer had low sales volumes, he said. "It would be challenging to keep the low volume platform in our export portfolio," Koch said, implying the company was considering phasing out Hummer anyway.
Koch also said he expected the local economic downturn to last longer and delay recovery in local vehicle sales. "We have not seen the bottom of the market yet."
New local vehicle sales fell 28,3% year on year in November to 34176 units.
"I'm hopeful that towards the second half of 2010 new vehicle sales will start picking up," he said, adding that the recovery in sales depended on what happened in the global economy. Koch said high material costs, boosted by the weak rand, which accounted for 75%-80% of the total operational costs, might force manufacturers to increase car prices by up to 20% next year.
Koch said he was "comfortable" with the way GMSA had performed and that the group had taken measures to remain lean and efficient .
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