GM Korea Looks To Recover Much Of The Blow From Lost Sales Volume In Europe

GM’s major manufacturing hubs in South Korea felt much of the blow when the company decided in 2013 to slowly phase Chevrolet out of most European regions.

“It was a tough call, but the right one,” GM Korea CEO Sergio Rocha told Automotive News. “We could not continue bleeding there. It’s loss avoidance.”

GM Korea operates four manufacturing plants in the country and they accounted for 20% of all GM sales worldwide last year, said Rocha. In fact, it produced nearly 34 percent of Chevrolets worldwide volume last year.

When Chevrolet completes its withdrawal from Europe at the end of 2015, those plants will have to add another 150,000 units to their lines, Rocha continued.

However, the manufacturing hub has already started to recover from the blow by entering new markets and securing new vehicle production. In fact, GM Korea has already recaptured about 35 to 40 percent of the lost volume from Europe.

How, you ask? Part of the recoup can attributed to the Korean-made Trax finally finding its way into the U.S. marketplace and by sending more knockdown kits (parts packaged up for assembly elsewhere) of the Chevy Orlando to Uzbekistan.

As for the new vehicle production, GM Korea has already secured production of the 2016 Chevrolet Cruze and it will hit the lines at GM’s Gunsan plant in late 2016, for local and export consumption — including the Australian market.

However, the scene at GM Korea is far from perfect. High labor costs are hurting its bottom line and the plant is unsure whether it will keep making the Chevrolet Aveo, once an all-new model is eventually introduced.

GM Korea also looks to counter-act the tumbling European volume by ramping-up volume at home, where sales have steadily risen over the past three years: Last year sales were up 10 percent to 155,000 vehicles, from 141,000 vehicles in 2011. The company accounted for 9.3 of the market share last year.

Plus, GM Korea expects even more growth this year, with ten product unveilings on tap (consisting of either new models, face-lifts and new powertrain options).

It all starts with the 2016 Chevrolet Spark, which rolls into production later this year.