GM will invest $7.3 billion in its operations in South Korea

Article by Christian A., on February 25, 2013

General Motors is investing $7.3 billion in its operations in South Korea over the next five years after it expands its Korean design center in Incheon, according to a Reuters report. GM has said in the past that it hoped to get total control of GM Korea by acquiring the 17% share that remains.

This announcement, coupled with reports that the next-generation Cruze won’t be produce in Korea, led to concerns that the company planned to either undertake a major restructuring of its Korean operations or to transfer some of this operation’s roles and responsibilities somewhere else.

GM Korea has played a main role in developing several newer GM passenger car models, which include the Chevrolet Malibu, Chevrolet Sonic, Spark, Cruze, and the Chevrolet Trax small crossover, of which a version is available in the U.S. as the Buick Encore. Both the U.S. market Chevrolet Spark and Buick Encore are produced in Korea.

Even if the Korean domestic car market stays relatively small compared to markets like China, Brazil, India and Russia, Korea remains to be a significant production base for GM, with five factories. The goal of GM is to widen its market share in Korea to 20%, with majority of this growth believed to come from the Chevrolet brand. The Korean domestic auto market is dominated by Hyundai and Kia.

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