General Motors to close its vehicle manufacturing plant in South Korea

In a major upheaval witnessed across the automotive sector, General Motors is expected to close one of its four vehicle assembly units in South Korea. The future of the remaining three assembling units is likely to be decided within the next few days.

According to Reuters, the firm is likely to incur impairment costs worth USD 850 million as a part of its business restructuring initiative in  the region. The reputed U.S. automobile giant is discussing issues such as cost-cutting with the labor unions & authorities in South Korea for transforming the business into a profit-making unit. Industry analysts claim that the firm’s strategic move is aimed at increasing the profits & innovations over production & sales.

For the record however, GM had to shut down its vehicle manufacturing units in Russia, Europe, South Africa, and Australia.

The firm’s key officials state that the shutdown of the unit is a part of its business restructuring plan in Asia. South Korea has been a low-cost vehicle export destination for the firm with a vehicle production estimated at one-fifth of its global automobile production. However, the rise in the labor costs, low demand for sedans, and high investments across automobile sector in China have hindered GM’s growth prospects in the country, apparently. GM Korea had recorded huge losses of nearly USD 1.8 billion between 2014-2016, claims an article from the CNBC.

In 2016, GM’s operations across Asian countries had suffered huge setbacks except in China. Recently, GM halted its vehicle production in Indonesia & Australia and restructured its operations in Thailand. The firm is anticipated to wind up its car production facilities in India and transform it into an export hub.

Apparently, General Motors’s decision to depart from unprofitable markets has created more issues for its business operations across South Korea, which had manufactured many Chevrolet car brands that GM had offered in Europe.