GM Korea set to increase imports, reduce local output
By Nam Hyun-woo
GM Korea CEO Kaher Kazem
GM Korea appears to be more interested in bringing more Chevrolet vehicles into the country rather than manufacturing them at its plants, adding to long-standing speculations that it will eventually stop producing cars in Korea, according to industry officials Monday.
Some officials criticized that the move is in contrast to GM Korea's promise last year to produce more cars in Korea in exchange for government aid worth 800 billion won ($659 million).
According to GM Korea, it has applied for membership in the Korea Automobile Importers & Distributors Association (KAIDA), which is a group of import brands in Korea.
GM Korea is running plants in Incheon and Changwon, South Gyeongsang Province, thus accounted for as a domestic carmaker. It is also a member of the Korea Automobile Manufacturers Association (KAMA), which is a group of domestic carmakers including Hyundai Motor, Kia Motors, SsangYong Motor and Renault Samsung.
GM Korea said it reached the decision as they are increasing the number of imported Chevrolet vehicles and it will do so in the future to “provide more options to Korean customers.”
GM Korea is selling seven passenger vehicles in Korea and three of them ― the Spark, the Malibu and the Trax ― are manufactured in Korea. The Bolt EV, the Equinox, the Impala and the Camaro are imported.
If the Colorado pickup and the Traverse full-size SUV debut in Korea as early as this month, more than 60 percent of the company's portfolio is filled with imported vehicle.
“As a member of KAMA and KAIDA, we will continue introduce various import brands and manufacture cars in Korea for Korean customers,” GM Korea CEO Kaher Kazem said in a statement.
GM Korea claims its pursuit of KAIDA membership is in line with its “two-track” approach, but industry officials say the move only spurs speculations on GM Korea's withdrawal, citing its faltering domestic output.
According to KAMA data, GM Korea manufactured 614,808 vehicles in 2015 and the number has been declining to 579,745 in 2016 and 519,385 in 2017. Last year, when the company suffered liquidity problems and closed a plant in Gunsan, North Jeolla Province, its output plummeted to 444,816.
This came after the company ended production of the Orlando, the Cruz and the Captiva in recent years but saw the allocation of new models to Korean plants delayed. GM Korea plans to assemble the TrailBlazer SUV in Incheon plant next year and manufacture a new crossover in 2023.
“GM Korea's KAIDA membership application appears to be the company's intention to stage a competition with import vehicles, because its imported vehicles cannot compete with domestic rivals in terms of price,” said an official at a domestic carmaker, asking not to be named.
Questions are also on whether GM Korea can successfully style Chevrolet as an import brand, because its imported vehicles are showing disappointing sales figures.
From January to July, GM Korea sold 38,234 passenger cars but the combined number of four import models delivered during the same period was 3,733. During the same period, Korea's top import brand Mercedes-Benz retailed 40,461 vehicles.