General Motors has been forced to cut production in South Africa, as the country’s economy has been struggling in recent years.
South Africa’s current economic environment is making General Motors revise its local operations, as it expects sales to further decline this year. Therefore, the Detroit-based automaker has reduced the production rate at its Port Elizabeth assembly lines in South Africa’s Eastern Cape province. Furthermore, a spokeswoman told Bloomberg the company is “currently considering all alternatives, including voluntary separations, to minimize the impact of these changed circumstances on our business and on our employees.” General Motors makes in South Africa the Chevrolet Spark, Chevrolet Utility and Isuzu pickups, as well as Isuzu trucks.
Local new-vehicle sales dropped in 2015 for the second consecutive year and are expected to further decline in 2016. Last month, 42,907 new vehicles were sold in the region, a 10.3 percent fall compared with a year earlier, while year-to-date figures show a slip of 9.8 percent of the auto market.
“The balance of 2016 industry sales numbers were expected to remain under pressure as a result of subdued economic growth, double digit new vehicle price increases, the possibility of further interest rate hikes and ongoing challenges confronting consumers and businesses,” the National Association of Automobile Manufacturers of South Africa said in a statement.
The local units of automakers including General Motors, Ford and Volkswagen have also started negotiations around wages with South African workers’ unions this week.