General Motors Co.'s recent facility investment in South Korea and plans to launch new vehicles show the U.S. carmaker's strong commitment in the market, a GM executive said Tuesday.
Early this year, the Detroit carmaker began to build a paint shop at the Changwon plant, one of its three car assembly lines in Korea, to support the local production of a crossover utility vehicle in 2023.
GM has two plants in Incheon, just west of Seoul. The three plants' combined output capacity reaches about 600,000 units.
"If you look at Changwon investment, the investment is worth hundreds of millions of dollars. A paint shop's minimum life cycle reaches 25 to 30 years. We don't (build) paint shops only for five to 10 years. (That's) too expensive. So (through) that kind of investment, we need to get returns," Julian Blissett, president of GM International, said in a press conference held in Incheon.
Normally, General Motors paint shops last for 30 to 35 years, Blissett said.
The significant investment in GM's Korean unit is to support its vehicle engineering and manufacturing of next generation global vehicles, he said.
Citing the establishment of the GM Technical Center Korea (GMTCK) and the GM Asia-Pacific Regional Headquarters in Korea, he said, "We need to see a return on our investment and we are here for long term."
He made the comments when asked if the U.S. carmaker will maintain its operations in Korea beyond 10 years from now.
Last year, GM vowed to keep its Korean operations running for at least the next 10 years and promised to introduce 15 models from 2018-2023 in exchange for fresh loans from the state-run Korea Development Bank (KDB), the second-biggest shareholder in GM Korea after GM.
GM holds a 77 percent stake in GM Korea, with the KDB and SAIC Motor controlling 17 percent and 6 percent, respectively.
In the past decade, GM Korea has been dogged by speculation that its parent may exit Korea due to a worsening business performance. It posted a net loss of 859 billion won (US$738 million) in 2018 after reporting 3.13 trillion won in accumulated net losses in the 2014-2017 period.
From January to May, its sales remained sluggish, falling 2.6 percent on-year to 194,721 vehicles.
To revive sales, GM Korea said it will launch the Colorado pickup truck in late August and the Traverse sport utility vehicle in early September.
The carmaker aims to increase the percentage of SUVs in its product portfolio to 60 percent from the current 17 percent, GM Korea President and Chief Executive Kaher Kazem said in the conference. He didn't give a timeframe.
The company is also considering adding the full-size Tahoe SUV to the lineup as carmakers are vying for a bigger share of the growing SUV market, he said.
GM Korea also plans to begin producing the all-new Trailblazer SUV in South Korea this year, with exports starting the following year. The Trailblazer would sit between the Chevrolet Trax and Equinox in size.
Last year, GM launched the upgraded Spark minicar and the U.S.-made Equinox SUV.
Its current Chevrolet lineup includes two SUV models -- the Trax compact and the midsize Equinox. Others are the Spark, the Malibu midsize sedan, the Impala flagship sedan, the Camaro sports car, the Bolt EV, and the Damas and Labo mini commercial vehicles.
In May last year, GM and the KDB signed the binding agreement that will permit a combined 7.7 trillion-won lifeline -- 6.9 trillion won from GM and 810 billion won from the KDB -- to keep the loss-making Korean unit afloat.
Under the deal, GM is banned from selling any of its stake in GM Korea before 2023 and is required to keep its holding in the unit above 35 percent until 2028.(Yonhap)