Published : 2014-03-12 11:37
Updated : 2014-03-12 11:37
GM Korea Co, the South Korean unit of U.S. automotive giant General Motors Co., is expected to foot the bill for the pullout of the Chevrolet brand from Europe, a corporate source said Wednesday.
The confirmation comes after General Motors International Operations (GMIO), which controls the South Korean company, recently said it set aside $621 million needed to discontinue sales of Chevrolet-badged cars in Europe and halt operations of local sales companies.
"GM Korea supplies 90 percent of Chevrolet vehicles sold in Europe and currently controls 15 sales companies, so it is natural for it to handle the pullout and deal with any losses," a insider said, not wishing to be identified.
He, however, said that GMIO's loss estimate is a rough number and could change when actual costs are tallied.
"A more precise estimate related to the loss will be announced in April," the source said.
GM announced last year that it will stop selling its Chevrolet vehicles in Europe by the end of 2015 in the face of poor sales.
The decision has angered union workers at South Korea's third-largest carmaker and raised fears of job losses. Industry analysts said halting exports to Europe may force production to drop by 20 percent.
The company produced some 780,000 vehicles last year, but this may be scaled back to 650,000 units in 2015.
GM Korea initiated voluntary early retirements last month, but repeatedly said it has no plans to lay off workers or adjust its long-term investment plans.