GM may cut South Korean output by 20% in 2015

Article by Anita Panait, on December 6, 2013

General Motors Co. may cut its production in South Korea by nearly 20 percent in 2015 compared with 2013, according to IHS Automotive. GM's South Korean sites could build 650,000 units in 2015 compared with 800,000 vehicles this year, according to a forecast IHS Automotive e-mailed to Reuters. 

GM has raised concerns over wage costs and labor relations in South Korea as well as its geopolitical tension with North Korea -- paving way for speculations that it would shift operations from the nation.

In August, three people familiar with GM's thinking told Reuters that GM's withdrawal from South Korea had already begun.  IHS expects GM to shift a large chunk of the output of its Mokka SUV to Spain starting 2014, and terminate the production of the Gentra small car and Damas and Labo commercial vehicles in South Korea by year-end.

"GM Korea's volume decline is seen as inevitable," IHS senior production analyst Ian Park said in the e-mail to Reuters.  He added the GM Korea's output may fall further after 2015 since GM has disclosed it will build the next-generation Cruze car and maybe the new Aveo small car elsewhere.

GM Korea has already cut production this year at its plant near Gunsan due to slumping vehicle demand in Europe. The company plans to build around 147,000 vehicles in 2014 at the 260,000 vehicle-capacity plant.

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