General Motors is shifting a large part of the output of the new Mokka subcompact sport-utility vehicle from South Korea to Spain. GM's Opel unit has received around 110,000 orders from Europe for the Mokka since the SUV was launched in June 2012, a spokesman for the division disclosed. Opel will commence producing the Mokka at its Zaragoza site in Spain in the second half of 2014.
The production shift could help the Zaragoza site achieve full output capacity and protect its 5,800-strong workforce, Opel said. The Zaragoza currently builds the Corsa compact and Meriva compact van, which are experiencing slumping demand. The Corsa and the Meriva saw their sales in 2012 drop by 14 percent and 36 percent, respectively.
Opel chief executive Karl-Thomas Neumann was quoted as saying that the move will allow them to build the Mokka in greater numbers and supply customers faster.
Opel posted $1.8 billion in losses in Europe in 2012 partly due to very high fixed cost of plants operating below capacity. Vehicles sales in crisis-hit Europe dropped to its lowest figure in 20 years in May 2013. Opel approved the closure of its Bochum site in Germany in April 2013, which is considered crucial to its management's strategy to return to profit as early as 2015.
After the first five months of 2013, Opel controls 6.8 percent of the new-car market in the European Union, while Volkswagen has 12.6 percent, Ford has 7.5 percent; and Peugeot has 6.2 percent.
Zaragoza site workers will initially employ kits from South Korea to assemble the Mokka, with an aim gradually increase the vehicle's local content in coming years. GM will invest EUR80 million to prepare the Zaragoza site for Mokka production.