General Motors will cease producing the Chevy Cruze in South Korea starting in 2015 in an effort to cut costs, the automaker’s South Korean arm said on Tuesday. The General will transfer production of its compact car line, which includes a sedan, hatchback, and station wagon, to other locations including China and Europe as it overhauls global output capacity, according to a GM Korea spokesperson. The move semi-confirms rumors that GM was planning to cut production at its Korean facilities, although the automaker did say that it will use the manufacturing base in the country to focus on producing mini and small cars.
The announcement marks the first time any car maker has announced plans to move production out of South Korea. Cruze production at GM Korea’s Gunsan plant accounts for 16 percent of total plant capacity, or roughly 150,000 vehicles a year.
But the news isn’t all negative when it comes to GM’s operations in South Korea: the automaker plans to invest $917 million each year in its Korean operations starting in 2013 to develop new vehicles and powertrains. According to another GM Korea official, the company will utilize its Korean arm to perform an increased amount of engineering there.
General Motors owns 76.96 percent of its Korean operations. Minority owners include KDB (17.08 percent) and SAIC Motor (6.01 percent).
The North American-market Cruze is expected to continue production at GM’s Lordstown complex in Ohio.
The GM Authority Take
Moving Cruze (and other Chevrolet) production for China, to China, was expected… but moving production of Europe-destined Cruzen to Europe, while rumored to be moved to Poland, is rather unexpected — even though it makes complete sense, given the plant underutilization at loss-making GM Europe. Currently, all Chevrolets — with the exception of Corvette and Camaro — sold in Europe are built in Korea.
Coincidentally, an all-new Cruze is due in 2015 — which likely explains the reason for the timing. The new vehicle will ride on the successor to GM’s Delta architecture, called D2, which will underpin no less than 12 nameplates including the next-gen Cruze and next-gen Equinox, which is expected to shrink in size from the current model while becoming a global vehicle.
It seems that only time will tell whether GM’s alliance with PSA Peugeot-Citroen will have or has had any effect on GM’s decision to relocate Cruze production.
Comments
your mean is that Gm korea will all stop Production of Cruze?
and move facilities to other location? such as china or eurp?
@Kim not sure how you could be confused by this. The Cruze will no longer be made in S. Korea. End of story.
Cruze doesn’t really sell well in Korea anyway. Seems like they want the tiny micro cars like the Spark or the bigger cars like Malibu and LaCrosse that are all produced there. Nice having a global car that can be moved easily around the world where needed.
I know this news is positive for the General’s bottom line, so we all should say, “Yay! for GM!”….
But isn’t it disheartening to anyone out there that this model of building everything in China is so common today?
For years I’ve heard about GM considering Volt production in China. Seems the only hangup has been the transfer of sensitive key information that the Chinese insist having ownership of. I certainly think that Voltec vehicles built in China for the Chinese market is a great idea if they can iron out those details. But where I draw the line is when Chinese Volts exported throughout the world mean Americans lose jobs at home.
Everyone at every GM factory in the U.S.A. and Canada should take notice: Next is North American production of model lines ceased and people laid off – and production of their lines moved to China as well.
Here’s a major problem – South Korea has human rights. China? Not so much. All my life and yours we have heard the United States marches around the world preaching human rights – but today’s business climate is to ship production of all our products to this country because their labor is dirt cheap. Today profit is always winning over the fair and decent treatment of workers. This is another form of slave labor we saw in America’s early days. Look to Apple as a prime example of how Chinese labor is treated in this Communist country.
I believe more people should have a lot more to say about this issue. The United States should be a maker nation again and not the taker nation it has become.
James, building cars in China for China is, by and large, a pre-requisite of competing there. See this for reference:
http://gmauthority.com/blog/2012/04/why-is-cadillac-selling-slower-than-molasses-in-china-and-what-is-gm-doing-about-it/
As demand for Chevrolets in China increases, I see absolutely no issues with building locally to satisfy local demand; this isn’t unlike GM building in North America to satisfy 99% of the demand for its products in region.
Furthermore, the Chevys currently built in South Korea are exported to Europe; now, it looks like European-market Chevys will be built in Europe, rather than being imported. As far as worker/human rights go, Europe is notorious for the highest form of such matters.
However, I fully agree with you on the human rights issues as they relate to China. Standards should be created, and if they already exist, the bar should be raised — something that should be done by American firms first and foremost operating in the region.
As for Apple, they’ve done a considerable amount in raising the standards at Foxcon’s plants, playing “cop” as it relates to the 3rd party manufacturers, and are now diversifying their production to other companies, as well. Short of building and running their own plants in America, they’ve done a noteworthy amount of work in the area, much more so than any of Apple’s “competitors” or even other firms in the industry.
All in all, it’s important to remember that at the end of the day, no product — no matter how good — is worth a human life or suffering of a person.
I feel it will be highly unlikely that a cost case could be there to manufacture in China to satisfy the US market. If there was that type of business case, the Japanese would have been exporting US made cars to Japan whenever the Yen got out of wack. Mexico is another story because shipping is just as easy as shipping from a US plant (thanks NAFTA). Also, because every auto maker in China is a 49-51% joint venture, the major auto makers in the US market can only make half the profit.
Unless someone figures out a cheaper way to move cars across the ocean, we should not see many Chinese cars here from any of the domestics. The Japanese, however, have already started…
http://www.thetruthaboutcars.com/2011/12/chinese-cars-have-arrived-as-honda-imports-fits-from-the-middle-kingdom/
Good timing on this article…
“SAIC Motor based in Shanghai has no plans to build or sell vehicles in North America for at least several years, SAIC USA President Yi Lu says.”
http://wardsauto.com/auto-makers/us-market-not-china-s-saic-short-term-growth-plan?NL=WAW-06&Issue=WAW-06_20121107_WAW-06_82&[email protected]&YM_MID=1350758&sfvc4enews=42
Sorry about my comment..
I’m kroean so. It not easy to explan my means to you correctly
is It rear? Gmkorea will no longer make J300 or J400 in Gm korea Factory?
I know GM will not make J400 / D2xx Project Car.
But i did understand with your article that Gmkorea have a plan to stop J300 Cruze in 2015
@kiim no problem 🙂
As I understand it, all Cruze production will be moved out of Korea in 2015, whether this is J300/current Cruze of J400/D2.
Thank you..
I’m warry about that if Gm korea(Gunsan) not make Cruze model..
how they use this Factory(Gunsan)..
According to other acticle. Gm have plans to use it making Small cal
But Gm korea have already Factory making small car in ChangWon(korea)
I want to know next plan about Gmkorea.. so i will wait your next acticle 😉
Kim — good question. A lot of things can happen by 2015. I’m not sure what the plan is, but it’s possible that the production mix at Gunsan will change. For instance, maybe more of the Aveo/Sonic will be made for export markets.
I’m sure we’ll know more in the coming months.
“Currently, all Chevrolets — with the exception of Corvette and Camaro — sold in Europe are built in Korea.”
I believe that this statement is in error. What about the Volt (and Ampera), and the Equinox? And all the Chevrolet trucks?
Raymond — you’re right, I forgot about the Volt. It’s currently imported from Detroit-Hamtramck. Good lookin’ out!
The Equinox is not available in Europe and neither are the full-size trucks.
Thanks again!
Alex