This week, General Motors and the Korean Development Bank announced a $7 billion investment deal to bail out the failing GM Korea unit. Besides concessions from the Korean auto union, GM and the KDB have agreed on a balance sheet restructuring that will allow GM Korea to reduce its existing debt by approximately $2.8 billion. As part of the deal, GM will open a new Asia-Pacific headquarters in the country. The plan gives GM ten years to put itself back on track, and the automaker expects the division to turn a profit in 2019. And now, GM has revealed specific details behind its plan to turn around GM Korea.
Besides “a deep partnership among major shareholders, the workforce and the Korean government”, the viability plan is underpinned by two new global vehicle programs as well as an engine, which will require a record $2.8 billion investment in GM Korea.
Under the self-described “robust business plan”, GM has committed to:
- Design, engineer and manufacture an all-new small SUV for Korea and export markets.
- Manufacture an all-new CUV-type vehicle for Korea and export markets.
- Engineer and manufacture a small three-cylinder gasoline engine in Korea for next generation global vehicles.