In the first bout of good news for GM Korea, the entity may have a funding deal in the works with the state-owned Korean Development Bank.
Reuters reported on Tuesday that the KDB may sign a preliminary funding deal with GM Korea on April 27 as it continues its due diligence. The preliminary deal will also depend on interim findings during the process as the KDB ensures everything looks relatively positive. KDB holds a 17 percent stake in GM Korea.
The funds could tally $468 million as part of KDB’s co-investment with General Motors’ proposed $2.8 billion investment over 10 years. The investment would bring new vehicle and engine production to GM Korea.
However, the deal will still rely on concessions from the auto union in South Korea. The union has until Friday to work out a deal with GM to cut costs in a restructuring process. Thus far, the union hasn’t budged aside from agreeing to no pay increases this year.
If the union and GM reach an agreement, KDB and GM Korea could sign a formal agreement next month. If they don’t, GM Korea will likely file for bankruptcy. The automaker also faces unfavorable public opinion. Locals have noted the automaker’s tendency to exit a market after government incentives run dry. Notably, GM pulled manufacturing from Australia’s Holden subsidiary as costs ran too high.
“What GM really needs to know is that anti-GM sentiment is very strong in South Korea. I told GM that they need to make me feel comfortable before I can make some kind of decisions,” KDB Chairman and CEO Lee Dong-gull said.
Comments
When other manufacturers, think Toyota etc, pulled manufacturing out of Australia, there weren’t nearly as big a public outcry. Makes you think eh. Just close shop in Korea and invest in Poland. Sell every single Chevy or GMC in Eastern Europe and Russia. Stop looking for collusion between Putin and Trump, and do bussness there.
There’s plenty of outcry now. GMH sales are falling off a cliff because many people think they’re about to pull up stumps.
GM has left Poland. And Poland is about to lose its EU subsidies, so PSA is leaving too. Everyone is.
You can still buy Chevrolets in eastern europe – they’re made in Uzbekistan.
Re ” Poland is about to lose its EU subsidies, so PSA is leaving too” — EU subsidies are for infrastructure projects, not to subsidise wages or factory operations.
PSA is refurbishing the former Isuzu Diesel engine factory in Tychy to produce 3-cylinder petrol (gasoline) engines for the small cars assembled in Trnava (Slovakia) and other factories.