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GM bankruptcy: SA impact

2009-06-02 06:52
Johannesburg - General Motors South Africa is part of its US parent company's "good assets", GM African operations president and MD Steve Koch said on Monday in a telephone conference.

Earlier on Monday the US vehicle manufacturer filed for court protection from creditors under section 363(b) of the US Bankruptcy Code.

The US government will buy GM's "good assets" and provide GM with an additional $30bn so it can get back on its feet.

Commenting on the US government's ownership of 60% of the "new" GM, Koch said that the parent company had "no option" but to allow such a significant level of government ownership.

Perception

"And I believe President [Barack] Obama when he says he has no interest in running GM," Koch said, referring to earlier comments made by the US president at a news briefing in Washington.

Koch emphasised that GMSA would not be affected by the US Chapter 11 bankruptcy protection filing. However, he acknowledged that South Africans viewed bankruptcy in a different light.

"In the US, Chapter 11 bankruptcy allows for a company to restructure," Koch said.

He said it was important for South Africans to note that the parent company in the US had not been put into liquidation.

"But even if GM had been put into liquidation in the US, GMSA would still be self-sufficient," he said.

Koch advised that GMSA would be publishing an open letter in the country's newspapers on Wednesday so as to clarify its position - and to put consumers' minds at rest that they could safely buy a vehicle from GMSA without fears of warranties, service plans, support and spare parts vanishing.

Asked how GMSA could still deal with US subsidiaries to which its parent company owed billions of dollars, Koch said GMSA had not missed a single payment to any supplier anywhere in the world.

"And we won't in the future miss a payment," he added.

Future positive


Koch estimated that GMSA's parent company would re-emerge within 60 to 90 days from its Chapter 11 bankruptcy. "After all, Chrysler emerged in 30 days," he said, referring to another American giant automobile manufacturer that filed for bankruptcy.

Turning to the Hummer, Koch said that there were still two to three viable parties interested in purchasing the brand.

He added that presently GMSA was continuing to sell and service Hummer vehicles until new owners emerged.

The future appeared to be very positive for the Opel brand in South Africa, Koch said.

Turning to head count reduction, Koch said that plants in the US would close.

However, any head count reductions in South Africa had so far "nothing to do with anything outside the boundaries of GMSA," he added.

Asked why GMSA should be immune from job cuts, Koch explained that the self-sustaining operation did not depend on exporting products to any other market.

"We're not trying to send anything into the US. For instance, our half ton utility vehicles are not sold in the US because they're perfect for the SA market."

He added that GMSA's Isuzu vehicles were "great for SA and for the African markets.

"We want to make sure we're the strongest player in SA and we want to build on our location and penetrate other markets in Africa."


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