Hector Villarreal, president and managing director of General Motors Korea, speaks in a meeting with employees at the company's Changwon plant in South Gyeongsang Province on May 15. (General Motors Korea)
Hector Villarreal, president and managing director of General Motors Korea, speaks in a meeting with employees at the company's Changwon plant in South Gyeongsang Province on May 15. (General Motors Korea)

General Motors has once again dismissed speculation that it plans to end its Korean operations despite the US automaker’s decision to sell off loss-making businesses and idle assets in Korea.

According to auto industry sources on Thursday, Hector Villarreal, president and managing director of GM Korea, met with the leadership of the company’s labor union the previous day to explain that the selloff decision was not part of a process to exit the Korean market but rather to increase profitability. He added that it will not impact the employment status of GM Korea workers.

Rumors of GM’s possible withdrawal from Korea were reignited when the company sent out a notice on Wednesday to its employees announcing that it will begin discussions with stakeholders to gradually sell its nine directly operated service centers nationwide as well as underutilized assets and land at its Bupyeong plant in Incheon.

“Maximizing the value of idle assets and streamlining the operation of loss-making service centers are important to maintaining the company’s sustainability,” said Villarreal. “We still have a few years left of our vehicle production program, and these measures are important to ensuring the business efficiency of the company.”

The notification mentioned that the asset sales will not impact GM Korea’s planned production. The automaker said it will continue to offer customer services at 386 service centers run by its partners while employees at the directly operated service centers will be relocated to other positions to maintain their employment.

GM’s exit rumors surfaced early this year when US President Donald Trump said he would impose "reciprocal" tariffs on auto imports. The 25 percent auto tariffs went into effect on April 3.

GM Korea sold about 500,000 vehicles last year, and approximately 420,000 of them were shipped to the US. If the levies stay, GM Korea is on pace to suffer serious damage to its businesses that heavily rely on US exports.

Despite GM’s continued denials of plans to withdraw, industry watchers have been warily eyeing the US brand’s future business in Korea.

For instance, GM Korea said it had no plans to roll out new vehicles at its Korean plants during a presentation on its current business status at its headquarters in Bupyeong last week.

The company operates two manufacturing plants -- one in Bupyeong and the other in Changwon, South Gyeongsang Province. It owns another plant in Bupyeong but it has been closed since November 2022. The automaker currently makes only two models in Korea: the Chevrolet Trailblazer, a compact sport utility vehicle, and the Chevrolet Trax, a crossover SUV.

“GM has a deal with the Korean government to continue its operations in Korea through 2027,” said an auto industry official. “GM has exited Australia, Europe and India by selling off its local manufacturing plants. They could be laying the groundwork for the same action plan in Korea.”

In 2018, the Korean government signed a contract with GM for the company to continue its business in the country until the end of 2027, offering GM 810 billion won in financial support amid the US headquarters’ global restructuring.


hwkan@heraldcorp.com