GM Korea sales dive on news of cuts

SALES of South Korean-built Chevrolet vehicles fell by almost half in February after parent company General Motors announced the closure of one of GM Korea’s four plants and a review of its remaining operations in the Asian nation.

Exports of vehicles made at the factories also fell by 9.4 per cent last month, placing further pressure on the operation just as a major shareholder, the Korean Development Bank, starts a probe of GM Korea books before considering a GM plea for financial assistance to help bail it out the ailing subsidiary.

A general softening of the South Korean motor market did not help GM Korea’s plight, with the market leaders, Hyundai and Kia, also reporting lower sales in February, albeit by 5.5 per cent in each case, after a surge in January.

Overall South Korean vehicle sales last month declined 11.9 per cent, to 105,432 units, compared with 119,612 vehicles in February 2017.

GM Korea produces a number of models for Holden, including the Astra sedan (sold as the Chevrolet Cruze elsewhere), Trax small SUV, Barina (Aveo) and Spark.

The biggest question mark is over the Astra/Cruze sedan which is made at the GM Korea’s under-used Gunsan plant that is earmarked for closure with the loss of 2000 jobs in May.

Cruze sales in South Korea plummeted 62 per cent last month, greatly contributing to the year-on-year drop of 48 per cent in Korean Chevrolet sales, from 11,227 units to 5804 last month.

Spark sales were down 39 per cent, while Aveo (Barina) took a 41 per cent hit.

Year to date, GM Korea domestic sales were down 14.2 per cent, to 79,126. This compares with Hyundai’s 3.5 per cent YTD rise, to 101,626 vehicles, and Kia’s lift of 2.5 per cent, to 76,110.

According to South Korean news reports, GM wants to cut 5000 jobs – about a third of the GM Korea workforce – after reporting an 800 million won ($A950m) operating loss in 2017.

The Korean Metal Workers Union – representing the 16,000 GM Korea factory workforce – claimed in February that GM had offered a new high-tech car to be sold in world markets if the South Korean government and the union supports its turnaround plan.