The longterm stability of General Motors’ South Korean division, GM Korea, has been called into question in the face of new tariffs enacted by the Trump administration. President Trump previously announced a 25-percent tax on vehicles assembled outside the U.S., which is expected to have a major impact on GM Korea operations. Roughly 85 percent of the division’s production volume is shipped to the U.S.
According to a recent report The Korea Times, GM Korea executives and union leaders recently traveled to meet with company brass in the U.S. to discuss future vehicle development and global production strategy. Union officials have reportedly advocated for the introduction of electric vehicle (EV) manufacturing in Korea as a path toward long-term sustainability.
Although The General has not publicly announced any plans to exit the market, it has taken steps to reassure both employees and stakeholders. Just last month, the company opened a new service center in the city of Seoul, while the automaker has also held internal meetings to address employee concerns. During one such meeting, GM Korea President and CEO Hector Villarreal told employees that the company is exploring various contingencies to mitigate potential fallout from the new tariffs.
As The Korea Times points out, General Motors has historically withdrawn from unprofitable markets, including notable exits from Australia, Indonesia, Thailand, and India. Now, South Korea may be at risk of joining that list if these new tariffs render its U.S. vehicle exports as noncompetitive. Analysts state that the new tariffs are likely to result in a significant price increase for vehicles assembled in South Korea and shipped to the U.S., thus reducing demand and reducing profit margins.
This is particularly impactful in the highly competitive small SUV segment. At present, GM Korea manufactures four models for export to the U.S., including the Chevy Trax, Buick Envista, Chevy Traiblazer, and Buick Encore GX, with production taking place at the GM Bupyeong plant and the GM Changwon plant. The company also operates various research and development centers in the region, and employs some 11,000 workers.
GM Korea has reportedly improved its profitability in recent quarters. However, as the new Trump tariffs take effect, the future of the international division will hinge on whether the company can continue that profitability into the future.
Comments
Well, Hyundai/Kia seem to be working on something to lessen the tariff impact. Don’t know what it is yet….
GM seems to be nickel and diming potential buyers lately with non-tariff price increases, destination fee increases, etc. so they should be able to eat the tariffs on the Korean foursome. You’d think. But oh, that’s right. Mary has to pay for all her unwanted EVs that keeping popping out the door.
Shows you how one man can ruin a global economy.
Ruined, eh? If you think this is ruined, did you not live thru the dot com bust, 08-09 years? Like most things in life, if you believe something is going to happen (or won’t happen) then that will become your reality.
Well, with the help of 77 million other idiots.
Do you mean the exporting of us autoworker jobs to Korea at the same time they closed use factories plunging entire towns into poverty ?
US union assembly is poor in comparison to Korean assembly. Asians have high personal and corporate quality standards. That’s why a small country like Korea can dominate world markets because they make the ordinary better. All Korean cars assembled in Korea easily out perform the lower quality us assembled counterparts.
Shows how Biden ruined an American economy.
Danny you are a Trump chump aren’t you?
we do not live in korea neither work for gm korea so we do not care about
It is very interesting to see that people are upset at Trump adding tariffs how terrible he is for doing this, but I see no one upset at the countries that are doing it to us. Why did you stop blaming Trump and start blaming the countries that are doing it to us. Its time we get our act together in the US. When it comes to tariffs, Right now, South Korea’s tariffs on imported agricultural goods average 54 percent, compared to the average 9 percent levied by the United States on the same kinds of imports. South Korea’s average tariff on non-agricultural goods is more than twice that of the United States – 6.6 percent compared to our 3.2 percent.
It’s time you go back to school and take ECON 101 over again. You obviously didn’t pass the first time.
Not to mention that it was the DEMOCRATS – Including Dementia Joe- that advocated for years that the playing field needs to be leveled. Now that Trump won by stealing their playbook, they are now crying.
Gosh, all you tRumpers that continue to think the idiot has done the right thing guess you haven’t paid attention this past week. Stock market has crashed again, even after he delayed his tariffs, even Elon the terrible has called the tariffs stupid, and has said Navarro is as dumb as a sack of bricks. Dump has managed to ruin one of the best economies in recent history in less than 4 months. What a guy.
Ya, but Trump’s cronies and himself benefited from the crash and rise of the markets. He is manipulating the markets, and cashing in.
Stability in the world is only a fantasy ( Comfort Zone) that among others, the stock market embraces. Change , slow or fast, good or bad, is reality. Some are hurt, and some are helped. The best at survival are keen to adapt, or are implemental in the change. Change continually brings about new opportunities to explore.
They sure built a lot more for export to the US than the pitiful number of all gm models they buy, both Korean built and imported. Overwhelming buy Kia/Hyundai & even Japanese makes.
To the benefit of American consumers, the thing all you pro-tariff numbskulls seem to forget.
Koreans don’t buy Japanese, and vice versa. Neither has a natural beef with the USA. A deal could look something like: shipping and oil supply security, aligned regulations abandoning the green albatross, auto imports from US, more defense support. We still need market allies, and they ultimately won’t mind the US in the bad cop role.
Koreans can buy GM vehicles that they produce in Korea. Why would any sane Korean buy a freakin tank of a pickup truck? Why? Huh? Why?
GM makes money overseas while american workers look for work.
Once US union workers start to assemble a vehicle to the high standard of Koreans, then you might have a point. Until then, their quality excells.
I look forward to the day when all imports are illegal. Then all sales of all products will be supporting Americans . Speaking as a very old person we should not have to go through another World War to learn this.
Great, er can all drive poorly assembled junk again like in the 60’s to 80’s.
Asians dominate the market because the build anything to a high standard. US unions build things to a minimum low standard. You remember when the Japanese had transistor radios? Everybody wanted it. Reliable, high quality. The Beatle was another high quality import. US manufacturing couldn’t touch it for simplicity, reliability, price, or fuel mileage. Where were you when these things happened?
I believe 10 years from now Ms Mary will be gone (CEOs can only last so long), and the entire mess will likely be fixed.
The Japanese nor the Koreans do NOT focus on Full Size SUVs/ Truck sales, so they can focus on smaller fuel efficient cars for the everyday driver.
Koreans only buy 15% of these popular cars that get manufactured there. Maybe now they will wish they bought more.
Tariffs are not tit for tat. We fought a war in Korea to keep them free, where many American soldiers died. Tariffs were used to help a fledgling democracy that is still under threat, grow. And look what we did to Vietnam.