GM Korea will be resuming the production of the Damas mini van and Labo mini truck in the latter half of this year, a move that the Korean unit of Detroit-based General Motors is hoping will show its renewed commitment to the Korean market.
The decision came Tuesday after the government decided to offer these two cars a grace period for its toughened safety and CO2 emissions rules that take effect in phases starting this year for all vehicles sold in Korea.
The move was welcomed by many, including the mom-and-pop stores that often use the vehicles, and also those who harbored suspicions that halting the production was part of a bigger plan from GM Korea to pull out of Korea in the near future.
|Sergio Rocha, chief executive of GM Korea|
Reflecting such views, GM Korea CEO Sergio Rocha expressed his gratitude toward the government for its support in resuming the production of the two models when he met President Park Geun-hye on Thursday in a get-together between the government and foreign business leaders.
“We are here to stay,” he said during the closed meeting, rebuffing rumors about the carmaker’s imminent pullout. President Park responded with, “The government is here to support you.”
To eventually meet the tougher standards, GM Korea said it would soon launch research and development work on a speed-limit device that sets maximum speeds at 99 kilometers per hour and new on-board diagnostic and tire pressure monitoring systems for the Damas and Labo.
“We will complete related R&D work as soon as possible to resume the production,” said a GM Korea official. Some industry sources predict the production could start as early as in July.
The company last month ceased the production of the two less-profitable models on the grounds that costs would rise in order to meet the government’s stricter safety and environmental standards.
The decision, however, faced an immediate backlash, especially from self-employed small vendors such as supermarket or dry cleaning shop owners because the pair are the only small commercial vehicles in the market whose drivers enjoy tax cuts and other generous benefits.
The combined sales of the two soared last year after it became known their production would be halted. The Damas and Labo sold 10,965 and 9,693 vehicles, respectively, up from 8,043 and 5,874 back in 2012.
The plan created further controversy by fueling speculation that it was a part of GM’s bigger plan to pull out of the country. Some 150 people worked on the Damas and Labo vehicles, while 133 suppliers, including 125 Korean firms, provide auto parts to them.
By Lee Ji-yoon (email@example.com)