GM Purchase Of Delta Motors Show Confidence In South Africa's Economic Engine

DETROIT January 28 2004; Sharon Silke Carty writing for Dow Jones reported that General Motors Corp. is hoping its recently completed purchase of Delta Motor Co. in South Africa will help the company gain a stronger foothold in sub-Saharan Africa.

The company pulled out of South Africa in 1986 during the time of apartheid, and returned in 1997 when it bought 49% of Delta Motor. GM recently said it bought the remaining 51% of Delta for an undisclosed price, and the company is waiting for government approval to close the deal.

"We're on a growth path," said Bob Socia, former vice president of GM Europe, during a conference call. "We're here because we feel very optimistic about what's happening. This market should be able to grow."

Mr. Socia will now head General Motors SA, the same name the unit had when it pulled out of South Africa.

A delegation of General Motors executives met with South African President Thabo Mbeki at his offices in Pretoria on Wednesday.

"I am very pleased to welcome General Motors back to South Africa," Mr. Mbeki said in a press release. "I am particularly pleased with GM's objective of establishing South Africa as its platform for participating in other growth markets in Africa."

The company reestablished the Chevrolet brand in South Africa in 2003, selling cars like the small Aveo and Lumina sedan. Through Delta Motor, it manufactures GM Opel brands and some Suzuki and Isuzu models.

The company has 3,400 employees. Maureen Kempston-Darkes, president of GM's Latin America, Africa, Middle East region, said the company doesn't have any solid plans to increase that number yet.

Mr. Socia said one of the first priorities for General Motors SA will be to put together an export program. Delta Motor has the capacity to build between 39,000 and 40,000 cars a year, he said.

Auto makers like BMW, Volkswagen AG, Nissan Motor Co. (NSANY), Ford Motor Co. and Toyota Motor Corp. already have a presence in South Africa. They use their manufacturing bases there to export parts to other areas, and use the economic credits they earn to bring more products in to South Africa, Mr. Socia said.

"One of the things we need to do is develop an export program as well," he said. Delta currently exports about 1,400 items, mostly automotive parts.

Delta currently has about 10.7% of the South African market share.