General Motors plans to invest $7.3 billion (8 trillion won) in its South Korean unit over the next five years to improve engineering and production abilities, underlining South Korea’s importance as a key manufacturing and development center.
“GM Korea will continue to play a major role in our global growth plans,” said head of GM International Operations (GMIO) Tim Lee in a statement.
General Motors currently operates five manufacturing facilities in South Korea which mostly supply Chevrolet vehicles to the local market, as well as to Europe and other regions, accounting for about a quarter of Chevrolet’s global production. The unit also contains design and engineering operations that were responsible for developing the Spark city car, Aveo/Sonic subcompact sedan and hatch, Trax subcompact crossover, Cruze compact sedan, wagon, and hatch, as well as the mid-size Captiva crossover.
At that, GM Korea will continue with its plan to double the size of its design center at its headquarters in Incheon by the end of 2013, making it GM’s third biggest after the U.S. and Brazil.
GM’s confirmation of the investment assuages concerns that the automaker would reduce its presence in the country. The worries surfaced when GM Korea said in late 2012 that it would not be responsible for building the next-generation D2XX-based Chevrolet Cruze. Fears grew further after GM was rumored to be interested in gaining full control of GM Korea by purchasing a 17 percent stake from the unit’s second-biggest shareholder — a move that was seen as a possible step to restructure the unit.
General Motors, which markets Chevrolet vehicles in Korea as of the beginning of 2011, is the third-biggest automaker in South Korea behind Hyundai and Kia. In the short- and long-term, it aims to increase its market share to 20 percent.