Is GM Getting Ready to Exit the South Korean Automotive Market?
After recently exiting a number of other global markets, GM might soon be adding South Korea to that growing list
Over the past few months, General Motors has been removing its operations from several global markets. Earlier this year, GM announced that it would stop manufacturing vehicles in India due to a small market share there, and the story played out similarly in South Africa.
Now, another country might lose its GM operations—one that happens to be the 10th largest automotive market in the world: South Korea.
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GM’s future in South Korea didn’t always look so grim. Back in February, GM predicted that 2017 would be a record year for sales in South Korea, with the goal to capture 10% of the country’s market share.
Instead, sales in South Korea are down by 24% so far this year. In October alone, GM’s Korean sales fell by 54%.
GM has tried to launch several campaigns to encourage Korean drivers to purchase its vehicles, including the “Citizens Movement for Purchasing Chevrolet” coalition. Alas, these methods have not yielded tangible results.
Falling sales aren’t the only reason analysts are predicting a GM exit from Korea. As the automaker scales back its international operations, its South Korean plants—which once delivered vehicles to several markets that GM has since left—have become somewhat unnecessary.
GM’s sale of Opel and Vauxhall to PSA issued a major blow to GM’s Korean operations. PSA announced that it would produce the remainder of Opel’s GM vehicle models in Europe, rather than South Korea.
Korea wasn’t only a major source of Opel production, but also of Opel sales. Twenty-two percent of GM Korea’s sales in 2016 were comprised of Opel vehicles.
As GM leaves these global markets, it is shifting its focus to China. After all, Buick and Cadillac’s success in China has caused the country to become GM’s top market for five consecutive years.
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Still, not everyone is convinced that GM will leave the Korean market entirely. Wujin Chu, a professor at Seoul National University, warned that by shutting down Korean operations, GM would only be hurting itself as well.
“It would mean that GM would lose a strong R&D center for compact cars,” he explained. “Overall, I feel GM’s exit is a lose-lose situation for both parties.”
Many other analysts, however, predict that GM will soon announce a departure from the South Korean market—a move that will possibly eliminate up to 300,000 jobs. GM’s South Korean workers are, understandably, quite worried about what the future might bring.
News Source: Forbes