General Motors’ decision not to build the next generation Aveo in South Korea – at least to start – looks like provoking a confrontation with the country’s militant auto trade unions.
Sergio Rocha, the head of GM Korea, told the union the automaker had decided to make the new Aveo in China and the United States, and South Korea could produce the model two years after its launch, the union told Reuters in a statement.
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The decision comes amid contentious wage talks between GM and its workforce and feeds fears that the automaker will reduce its presence in the country which makes over four out of 10 Chevrolet vehicles sold globally.
“It was a shocking announcement,” the union said, adding that it may strike if fails to reach a deal with the management on wages and future production plans this month.
A GM Korea spokesman told the news agency the new Aveo would be produced in China and the United States but the automaker had not yet decided if it would be produced in Korea and elsewhere. [The current one is made in Russia, too – ed.]
Currently, the Aveo sold in China is shipped from South Korea in CKD kit form for local assembly.
GM executives have said that rising wages and tough labor relations make it increasingly unattractive to produce cars in South Korea.
Opel unions have also called recently for Korean-made Opel and Chevrolet models sold in Europe to be built there.
The Korean union argues that the Aveo decision runs counter to an earlier pledge from GM to produce cars including its next-generation global mini, small and midsize cars in South Korea.
A union official also told Reuters GM Korea is unlikely to produce the new Aveo two years after the launch, as by then the model will be older and face less demand.
GM Korea also said late last year that it will not produce the next-generation Cruze small car in South Korea, sparking speculation that output of that model may move to Europe to support ailing Opel.
Under the annual wage talks that kicked off in late April, the union has demanded that the automaker scrap its plan to cease output of the new Cruze in South Korea. Other demands call for a bonus equivalent to three months’ salary and a one-time payment of KRW6m (US$5,300) as well as a basic salary increase of KRW130,498.
GM Korea’s union leader Min Ki told Reuters employees are working more hours than major overseas counterparts and are being paid less than workers at rival Hyundai Motor.
