R18bn Hummer contract for GMSA
8 April 2005
General Motors, the world's largest car maker, has awarded its South African arm a contract worth R18-billion to manufacture a new global version of its Hummer sports utility vehicle for export to markets in Europe, Asia Pacific, the Middle East and Africa.
Making the announcement this week, General Motors (GM) said it would make a US$100-million investment into product development and production at General Motors South Africa's plant at Struandale, Port Elizabeth in the Eastern Cape, which currently manufactures Opel and Isuzu vehicles.
South African production of the new Hummer H3 - a smaller, cheaper, more fuel-efficient version of famous sports utility vehicle (SUV) - will begin in the last quarter of 2006, with up to 10 000 units a year being targeted, creating an estimated 450 new jobs.
Vote of
confidence in SA
In the last few years, South Africa's large car makers have all - barring GM, up until now - launched major export programmes. GMSA's six-year contract represents a major vote of confidence in SA's auto manufacturing sector, and will give a big boost to the country's vehicle exports.
The H3 export programme investment is over and above the $50-million (R300-million) that GMSA invested in plant and equipment upgrades and the $80-million (R480-million) it invested in the new Isuzu KB in 2004.
"This is a continuation of a trend of expansion of existing investments in SA, and will hopefully mark the start of a real upward trend in foreign direct investment", Reg Rumney, head of consultants BusinessMap, told Business Day.
According to Business Day, SA's vehicle exports have grown ninefold over the last 10 years - helped greatly by the government's Motor Industry Development Programme - and the auto industry now contributes in the region
of 7% to gross domestic product.
General Motors returned to SA in 2004 following its withdrawal from the country under apartheid. GM group vice-president Maureen Kempston Darkes told Business Day that the company was now more convinced than ever before that they had made the right decision.
South African vehicle sales soared by a record 22% in 2004, and show no signs of slowing in 2005 - first-quarter sales were up by 23% over the first quarter of 2004.
Hummer goes global from SA
South Africa will be the only manufacturing site outside of the United States to assemble the Hummer H3, using components produced at GM's Shreveport, Louisiana plant but with revisions such as right-hand drive for H3s sold outside North America.
SA-built H3s will be exported to left-hand drive markets in Europe, the Middle East and Asia, while right-hand drive versions will be exported to markets such as the UK, New Zealand, Australia and other Asian
markets.
Plans are also in place for the H3 to be retailed in South Africa from the middle of 2007.
General Motors said the H3 will eventually offer a diesel engine designed for some international markets - particularly Europe, where about half the cars and trucks run on diesel.
"The H3 exported from South Africa has the size and features to expand the appeal of the Hummer brand to an international audience", said GM group vice president Maureen Kempston Darkes.
The Hummer H1 and H2 models - adapted from the Humvee vehicle developed for military uses - have been sold primarily in the US and Canada, although GM began exporting the H2 to countries in Europe, Asia and the Middle East in 2004.
GM says the H3 will be "an authentic Hummer, offering the brand's iconic design and famed off-road capability in a midsize and more accessible package.
"H3 aims to become the leader in off-road performance among midsize SUVs, just as the H2 achieved that
stature among full-size SUVs. In addition, H3 delivers surprisingly comfortable on-road manners and a clean, well-crafted interior."
The H3 South Africa export vehicle will initially be available with the Vortec inline 5-cylinder engine, choice of manual or automatic transmissions and a premium, full-time four-wheel drive system
SouthAfrica.info reporter
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