General Motors Korea plans to slash its headcount by launching a "voluntary retirement" scheme open to its 7,000 office workers, a company source told Reuters.

GM Korea spokesman Park Hae-ho, confirmed the plan was aimed at "enhancing its organisational efficiency" and said it is the first time the company has made such a plan applicable to all its office workers, following an earlier scheme limited to senior office workers.

Park did not disclose a target for the reductions, but said its 10,000 production workers will not be affected.

The move is causing concerns about a restructuring at GM Korea, which is being squeezed by rivals Hyundai Motor and its affiliate Kia Motors as well as by imported vehicles from Germany, Japan and other countries.

The South Korean market is shrinking due to the global economic slowdown and as heavy household debt cuts demand. GM Korea is not the only carmaker to cut jobs in response. The South Korean unit of French carmaker Renault SA this year cut 800 workers, or about 15% of its workforce, using a similar programme.

GM's South Korean market share has fallen below 10% since 2008. The carmaker had a 9.4% share from January to October this year in the domestic car market while Hyundai and Kia controlled around 80%.

After GM's plan was disclosed, a GM Korea union spokesman said it is like GM Korea "declared a war" against the union following the carmaker's earlier announcement that it will exclude South Korea from the production of its next-generation Chevrolet Cruze model.

Union officials said they were told on 1 November that the new Cruze will be produced in Europe and four other regions, sparking speculation that GM may move output to Europe to help boost efficiency at its money-losing unit there. .

GM Korea, which ranks third in South Korean car sales after Hyundai and Kia, started receiving applications for its latest plan on Tuesday and will close it on 14 December. Under the programme, workers will receive compensation of up to two years' salary, two years' school tuition support and a car voucher worth KRW10m (US$9,200), according to a 20 November company notice obtained by Reuters.