Alongside General Motors’ announcement it is cutting the Chevrolet brand back to niche models in Europe comes news of production cutbacks in South Korea where those mainstream Chevy models for the chop are made.
Industry researcher IHS Automotive expects GM to cut the number of cars it makes in Korea by nearly 20% in 2015 compared with 2013, Reuters reported.
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Wage costs, labour relations and geopolitical tension with North Korea reportedly are worrying GM, leading to speculation it could shift operations which account for a fifth of global production.
In August, three people familiar with GM’s thinking told Reuters the pullout had already begun.
GM’s South Korean factories could produce 650,000 vehicles in 2015 compared with 800,000 vehicles this year, according to a forecast IHS Automotive sent to the news agency.
IHS expects GM to move a large portion of the production of its Mokka sport utility – also made as the Chevy Trax – vehicle to Spain [Zaragoza – ed] starting next year, and stop producing the Gentra small car and Damas and Labo commercial vehicles in Korea by the end of the year.
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By GlobalData“GM Korea’s volume decline is seen as inevitable,” IHS senior production analyst Ian Park said.
Production is likely to fall even more after 2015 because GM said it would make the next generation Cruze and perhaps the new Aveo small car elsewhere, Park said.
Australian unit Holden makes the Cruze for local sale and it is also made with other Korean designed models in the US.
GM spokesman Park Hae-ho declined to comment on the IHS projection. “We don’t discuss future production plans in public due to competitive reasons.”
GM Korea, which makes most of the Chevrolet cars sold in Europe, has already reduced output this year at its factory in the southeastern city of Gunsan because of slow European demand.
It plans to produce about 147,000 vehicles next year at the 260,000 vehicle capacity plant, in what the labour union termed “a gravely serious situation”, Reuters noted.
