GM Korea has announced what it describes as ‘a robust business plan’ that is intended to return the company to profitability by 2019.
The ‘viability plan’ will be underpinned by a US$2.8bn investment in two new global vehicle programs and a ‘deep partnership among major shareholders, the workforce and the Korean government’.
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Additionally, GM and the KDB have agreed on a balance sheet restructuring that will allow beleaguered GM Korea to reduce its existing debt by approximately US$2.8bn.
The company’s two major shareholders, the Korea Development Bank (KDB) and General Motors, confirmed their full support of the viability plan by finalising a binding agreement that will help enable a profitable, long term future for GM Korea.
“GM is very excited about our future in Korea,” said GM executive vice president and president GM International, Barry Engle. “Together with the KDB, the Korean Government, the labor union and our supplier partners, we have created all of the building blocks for executing a long-term viability plan that will be good for our people, good for our company and good for Korea.”
Under the plan, GM will:
- Design, engineer and manufacture an all-new small SUV for Korea and export markets
- Manufacture an all-new CUV-type vehicle for Korea and export markets
- Engineer and manufacture a small three-cylinder gasoline engine in Korea for next generation global vehicles.
Kaher Kazem, president and CEO of GM Korea, said GM’s record US$2.8bn foreign direct investment will sustain 200,000 Korean jobs directly and indirectly, including at local suppliers.
“GM Korea now has the right fundamentals to grow a successful business in Korea for the long term,” said Kazem. “Our Chevrolet customers, employees, partners and community will all be part of this bright future. We will convey Chevrolet’s true value to domestic consumers again through the launch of new models and innovative customer care programs, in addition to large-scale customer-focused marketing and sales activities.”
GM’s loss-making operations in Korea have been hit by GM’s withdrawal from sales in some parts of the world; European exports have dried up and that has led to plummeted rates of capacity utilisation at GM’s Korean manufacturing plants.
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