A binding contract to sell the plant to Chinese car company Great Wall Motor Company has been signed which will see it take over the plant in Rayong which will be developed as a manufacturing and sales centre for GWM to exports its range of sports utility vehicles and pickups into the ASEAN market. One notable facet of the GM rationalisation is that the Detroit car firm is moving out of all its markets, like Thailand, with right-hand side drive.
General Motors is pulling out of Thailand with the loss of 1,500 jobs as part of a global strategy to focus on more profitable markets as the car giant moves from the automobile business into the mobility business. The announcement was made on Sunday but there was some consolation and hope for Thai workers as it was also announced that the Chinese car company Great Wall Motors is purchasing the former GM plant in Rayong and has plans to make it the focus of an expansion of its business into the ASEAN market.
General Motors on Sunday announced that it was closing down all its operations in Thailand which will see the loss of 1,500 jobs primarily at its Rayong manufacturing plant. The news comes following an August announcement that up to 350 jobs were going but at that time, the company committed itself to remaining in Thailand.
It is emerging that the move to cut its ties with the kingdom is part of a radical reorganisation within the American giant automaker being driven by its first female Chief Executive, Mary Barra.
GM disposing of non-core business units worldwide
In 2017, GM sold its long-standing Opel and Vauxhall motor business in Europe and it is now pursuing the same strategy worldwide to focus on the more profitable parts of its business and those which it sees with more potential for growth.
Focus on four key markets including the US and China
This will see the company focus its operations on the United States, Latin America, China and South Korea.
In 2000, General Motors established itself in Thailand and has over the last twenty years invested $1.4 billion or ฿43.4 billion in two plants in Rayong including an engine manufacturing and car assembly plant.
China’s Great Wall Motors to buy GM’s Rayong plant
The company has on Sunday announced that a binding agreement between General Motors and the Chinese sports utility vehicle and pickup manufacturer, Great Wall Motors based in Baoding, has been signed for the Chinese firm to buy the Rayong auto plant from it. This offers some hope to Thai workers.
The decision by General Motors to exit Thailand comes as it has also announced the closure of its Australian and New Zealand business of long-standing including the famous Holden car brand, one of the oldest in the world.
The company’s performance in these markets was in decline.
First indication came in February 5th financial briefing to analysts with $1.1 billion change budget
The first indication of the move came in a financial briefing to analysts by the company’s Chief Financial Officer Dhivya Suryadevara on Wednesday, February 5th.
The GM group is poised to attain flat but consistent profits in 2020 despite producing a better than expected set of figures in the final quarter of 2019 after enduring a United Auto Workers strike which is reported to have cost it $3.6 billion.
The current reorganisation is expected to see once-off charges of $1.1 billion.
Severance packages above statutory requirements
General Motors has promised to pay its Thai workers a severance package in excess of statutory requirements and will cover all existing warranties and spare parts requirements with authorised service providers.
It will now retire the Chevrolet brand from Thailand only retaining in some specialised areas.
Company cuts ties with right-hand drive markets
The company is ‘focusing on markets where we have the right strategies to drive robust returns, and prioritizing global investments that will drive growth in the future of mobility,’ said CEO and Chairman Ms Barra in a statement.
This will see the company apply itself to the development of electric cars and self-driving vehicles in the future within the markets it is now focusing on.
Another consideration in the reorganisation has been axing of operations in all countries with a right-hand driving such as Thailand, the UK, India and Japan to focus on countries with a tradition of left-hand drive.
GM has also pulled out of Indonesia, once seen as a competitor to Thailand.
Rayong pant to become the centre for Chinese car firm’s expansion into ASEAN from Thailand
The Rayong plant will become however the centre for expansion plans by China’s Great Wall Motor Co Ltd. which will use the Rayong plant as a centre to manufacture and market cars into the ASEAN market and Australia with Thailand as its centre.
‘The acquisition of GM’s Thai Rayong plant will help the business development of Great Wall Motors in Thailand and the ASEAN market. Great Wall Motors will expand through the entire ASEAN region with Thailand at the centre, and export its products to other ASEAN countries as well as Australia,’ the Vice President of the Great Wall Morior Company for Global Strategy Liu Xiangshang said on Monday.