A GM Korea assembly plant completes a Chevrolet Cruze in this file photo

A GM Korea assembly plant completes a Chevrolet Cruze in this file photo

Kaher Kazem, former managing director of the now gutted GM India and the new CEO of GM Korea, reportedly has assured employees the parent company has no plans to quit Korea but heads of the GM branch of the Korean Metal Workers Union reportedly are not so sure.

According to WardsAuto.com, their concerns are based on GM's move to consolidate all of its international operations except China into a new organisation headed by Barry Engle, currently corporate executive vice president and president of GM South America.

This is likely to entail cost cutting and increasing productivity at all of GM's unprofitable or marginal properties, including those in South Korea, the report said.

Wards said 17.02 % of GM Korea shares are owned by Korea Development Bank, which has a seat on the board and veto power over any move to downsize or sell off major assets. Its 15 year veto power [said to be connected with the GM takeover of Daewoo] ends on 17 October, raising speculation by KMWU officials that GM may scale back, if not terminate, GM Korea operations once the parent company has the latitude to do so.

Many analysts reportedly think the union speculation may have some substance and a drastic downsizing of money losing GM Korea makes good business sense.

Short of boosting production to optimum levels by assigning models built elsewhere to GM Korea's underused, high cost plants, the chances of realising a profit based on the company's current performance are considered remote, WardsAuto said.

Kazem has been CEO since 1 September and has told union leaders and employees GM Korea's finances are poor - it has lost money in three consecutive years, with a cumulative net loss of KRW1.97 trillion (US$1.7bn). He's asked for improved efficiency and productivity.

He also stressed GM has no plan for abandoning Korea, instead pledging GM Korea was a valued affiliate important to overall international operations, WardsAuto said.

But, instead of cooperating with Kazem, union leadership called a partial strike staged the day before the CEO held a news conference to give public assurances that GM Korea has a good future. Kazem then asked KMWU negotiators to meet with him on 15 September for a ninth round of wage negotiations that had begun in April. Union bargainers refused to meet with management and ramped up the partial strike.

In India, Kazem oversaw the sell off of the factory in Halol to SAIC (which will make MGs there) and the conversion of GM India's main plant in Talegaon to a producer of kit cars for export only. Thus, union leaders see Kazem as a restructuring specialist who was sent to GM Korea to shrink operations, possibly ahead of a complete pullout, WardsAuto said.

The unions continue to make unreasonable demands on pay and other issues.

Analysis by just-auto of September sales by South Korea automakers showed GM Korea's global sales fell by 10.7% to 40,264 in September, from 45,113 units a year earlier, reflecting a sharp decline in domestic sales. In the first nine months of the year, built up vehicle sales were down by 7.5% at 401,980 units compared with 434,573 units a year earlier. The data did not include exports of knocked down kits for assembly overseas but WardsAuto.com reported September shipments down 4.1% to 48,004 units and the nine month tally off 12.6% to 445,127.

Domestic sales continued to plunge last month, by over 36% to 8,991 units from 14,078 units a year earlier, with most major models under pressure from renewed competition from Hyundai and Kia. Year to date domestic sales were almost 20% lower at 102,504 units from 127,990 units previously.

CBU exports were slightly higher at 31,273 units in September compared with 31,035 units a year earlier, but were 2.3% down year to date at 299,475 from 306,583 units previously.

In contrast, Hyundai Motor's global sales rose by 3.5% to 400,995 units in September from 387,300 units a year earlier, reflecting a sharp jump in domestic sales. In the first nine months of the year, the brand's global sales were still down, by 6% at 3,269,025 units from 3,479,068 units a year earlier.

Domestic sales jumped by almost 44% to 59,714 units in September from 41,548 units a year earlier, helped by the recent launch of the Kona sub-compact SUV and strong sales of other mainstream models. Cumulative nine month domestic sales were close to 15% higher at 518,671 units compared with 452,663 units a year earlier.