General Motors has now proposed a $2.8 billion investment over the next 10 years to remain in South Korea, according to a Reuters published on Tuesday. The report added that the investment is a separate offer from the $2.2 billion debt to equity swap offer GM also presented to government officials.
The automaker would allocate the $2.8 billion over 10 years to secure its operations for the time, but GM has asked South Korea to pump in $476 million towards the investment through the state-owned Korean Development Bank (KDB). Additionally, the automaker has also reportedly asked for a generous credit instrument at more favorable interest rates. KDB has refused such a concession in the past and asked for more representation on GM Korea’s board of directors—GM never obliged.
South Korean rade minister, Paik Un-gyu, told parliament he wants an audit into GM’s operations before committing to the co-investment plan. He also wants concrete assurance of GM’s intentions if the plan moves forward.
All of the negotiations stem from GM’s decision to close its Gunsan plant in the country, which employs 2,000 workers. The plant has run at 20 percent of capacity for years, though it’s capable of producing 250,000 vehicles annually. GM has consistently lost money with its GM Korea subsidiary, and the automaker has been keen to drop unprofitable businesses as of recent.
GM has also reportedly teased the possibility of two new vehicles for Korean assembly, though it’s unclear if the product allocation rests on finalizing one or more of the proposed deals.
Comments
Not going to happen as South Koreans are among the cheapest people in the world and a prime example is how South Korea is not even willing to spend the money needed to defend themselves as this is why the United States has needed to protect them for over 50 years with no time line of when the South will be able to defend themselves without the assistance of the United States.
Yeah. Its amazing how they refuse to pay for foreign troops to occupy their country.
How could you possibly “co-invest” with GM. Look what they did to Australia – promise – promise ….. Australia puts in billions then GM keeps asking for more and more money …. when Australia says enough is enough, GM takes it’s bat and ball and goes home with it’s tail between it’s legs.
Korea can well do without the likes of GM.
Gm has to offer what Hyundai kia do in Korea to gain market shares, it can add its portfolio of SUV’s and even Buick cars and export the Orlando to North America and other markets.