The home of America’s smallest General Motors vehicles is bleeding sales and cash, forcing the automaker into harsh measures in an attempt to save its South Korean operation. Many fear last week’s plant closure announcement is just the beginning of an eventual exodus from the Korean market. There’s three remaining assembly plants, each sitting on shaky financial ground.
Today brings encouraging news, however. Two reports paint a picture of GM in triage mode, doing everything in its power to stem the bleeding — of both money and customers.
According to Reuters, a South Korean lawmaker claims GM International president Barry Engle promised members of parliament two new vehicles in a Tuesday morning meeting. South Korea owns a 17-percent stake in GM Korea, and it isn’t clear whether the product promise hinges on government support.
With 2,000 jobs already in jeopardy at GM’s soon-to-be shuttered Gunsan plant, and worker unrest growing, government intervention seems inescapable. On Monday, Reuters reports, South Korean President Moon Jae-in told his administration to assist in economic development efforts in the manufacturing region surrounding the plant.
Moon said the government will “aggressively” pursue these measures, which may include designating Gunsan as an “employment crisis area.” Such a label would allow for cheap business loans and support for laid-off workers.
On Tuesday morning, another Reuters report, citing four sources close to the matter, claimed GM plans to erase $2.2 billion in debt by converting it to equity. This would be done in exchange for “financial support” and tax benefits from Seoul. One source says GM wants $1 billion in support from South Korea, while another claims GM demanded its factory sites be labelled “foreign investment zones,” thus making them eligible for tax breaks for a period of seven years.
Though GM Korea’s domestic sales have fallen severely, it still exports vehicles to markets around the world, including North America. In his meeting with lawmakers, Engle said he’d like to see production continue at its current rate (roughly half a million vehicles per year). The Chevrolet Spark, Sonic, Trax, and Buick Encore all hail from South Korean plants.
[Image: General Motors]
Automakers privatize profits and socialize losses.
that’s certainly what the 2008 US bailout did
Automakers are pikers compared to the financial industry.
Quote of the day.
once China acquires sufficient tech for their indigenous manufacturers, the American and European rope sellers will be shown the door there too.
just a matter of time
When did sonic production move from the u.s.?
If it did, it must have been recent. It was manufactured at Orion Township as recent as the fall of 2016.
The Aveo and related nameplates are made in multiple countries.
I think those were just knock-down kits from Korea, assembled in the US mostly as a post-bailout concession to unions.
Actually I was just trying to be polite – according to gm they are still produced there. I’ll resist the urge to yell “FAKE NEWS”.
The U.S. market Chevy Sonic is still assembled in Orion, Michigan. That’s one of the little car’s claims to fame.
But overseas market Sonics, and the identical Holden Barinas, are built in Korea
I know some immigrants from Korea, and the ones that do have Hyundai or Kias, as soon as they have enough money they start buying Lexus’s and MBs. Some of them go as far as not wanting Korean brand cars altogether.
Let GM Korea fail, it’s not like Koreans as a whole buy all that many non-Korean brand cars anyway even if the GM cars are made there.
That’s more a class / income / status thing. Little to do with ethnicity.
According to my tour guide in Seoul last summer, 85% of cars sold in S Korea are domestically produced. To abandon the factory is to abandon the market.