Business Companies 17 Feb 2020 General Motors to ex ...

General Motors to exit three countries over low ROI

AP
Published Feb 17, 2020, 9:35 am IST
Updated Feb 17, 2020, 9:35 am IST
GM said in a statement Sunday that it will wind down sales, engineering and design ops for its historic Holden brand in Aus and NZ in 2021
GM logo (AP file photo)
 GM logo (AP file photo)

General Motors says it’s pulling out of Australia, New Zealand and Thailand as part of a strategy to exit markets that don’t produce adequate returns on investments.

The company said in a statement Sunday that it will wind down sales, engineering and design operations for its historic Holden brand in Australia and New Zealand in 2021.

 

It also plans to sell its Rayong factory in Thailand to China’s Great Wall Motors and withdraw the Chevrolet brand from Thailand by the end of this year.

GM has 828 employees in Australia and New Zealand and another 1,500 in Thailand, the company said.

CEO Mary Barra says the company wants to focus on markets where it can drive strong returns. She says GM will support its employees and customers in the transition.

The company said it will scale back operations in all three countries to selling niche specialty vehicles. It also will make the same move in Japan, Russia and Europe, where “we don’t have significant scale.”

“We are pursuing a niche presence by selling profitable high-end imported vehicles supported by a lean GM structure,” International Operations Senior Vice President Julian Blissett said in the statement.

GM said it will honor all warranties in the markets, and it will continue to provide service and parts. Local operations also will handle recalls and any safety-related issues, the company said.

The Detroit automaker expects to take $1.1 billion worth of cash and noncash charges this year as it cuts operations in the three countries.

GM has a long history in Australia with the Holden brand, where cars were designed and sold in the U.S. and other markets. The 2008 and 2009 Pontiac G8 muscle car, for instance, was designed as a Holden Commodore and built in Australia.

But GM said Holden’s market share, which was nearly 22% in 2002, fell to just over 4% last year.

GM President Mark Reuss, who once ran the Australian operations, said the company explored options to continue Holden, “but none could overcome the challenges of the investments needed for the highly fragmented right-hand-drive market, the economics to support growing the brand, and delivering an appropriate return on investment,” he said in the statement.

The company also said it analyzed the business case for future production at the Rayong plant Thailand, but low use of the plant and expected low sales volumes “made continued GM production at the site unsustainable.”

GM has struggled in Asia in the past year. It’s International Operations, which include China, lost $200 million last year, including $100 million in the fourth quarter.

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