Japanese vehicles and diesel engine manufacturer, Isuzu, has bought out the 57.7 per cent stake held by US Motors General Motors in GM East Africa for undisclosed amount, the two announced yesterday.
The transaction will see GM East Africa 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.
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.
“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.
Isuzu business which is truck based will be focused on the provision of light commercial buses and trucks. The Japanese vehicle manufacturer will 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.
GMEA ,whose market share currently stands at 31.5 per cent, posted a 30 per cent drop in sales in the year to December 2016. Its sales are 90 per cent driven by Isuzu brands.
“Last year we sold about 4,500 vehicles. Right now there is a slowdown in the market so we are projecting that the industry will do about 14,500 vehicles,” said Kavashe.
The industry slowdown, Kavashe says has been mainly driven by capping of interest rates which has weighed down on customer access to loans. Other factors that may pose a challenge to the vehicle manufacturer are the August 8 polls and the general liquidity in the market.
She added that Government sales which contribute to 30 per cent of the firm’s total sales are likely to drop by half this year down to 15 per cent.
“We depend quite a bit on government sales and the government has cut down on its purchases since last year so that is going to affect the business,” said Kavashe.
The sale to Isuzu Motors will be completed after all the necessary approvals have been sought from the competitions authority and COMESA and will have no impact on jobs.
General Motors started operations in 1977 with the assembly of vehicles. The firm exits the region leaving its manufacturing plant in Nairobi. The company has since inception assembled over 80,000 units.
“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.