GM’s Changwon plant sees 40% drop in sales

Sales of vehicles made at GM Korea’s plant in the southern city of Changwon have plunged 40 percent over the last four years, industry data showed Monday, casting doubt on its future viability.

GM Korea’s Changwon plant produces the Spark city car and Damas and Labo small commercial vehicles. It is one of GM Korea’s three plants in South Korea. The two others are in Gunsan on the west coast and Bupyeong south of Seoul.

According to the data, domestic sales and exports of the three models came to 150,000 units in 2017, compared with 250,000 four years earlier. In particular, sales of the Spark tumbled to around 50,000 units last year from about 80,000 a year earlier.

The rate of decline was 10 percent for the Bupyeong plant over the cited period and 80 percent for the Gunsan plant, which led to GM’s decision to shutter the plant.

Currently, the Changwon plant employs around 2,000 workers and produces some 60 vehicles per hour with its capacity utilization rate reaching approximately 70 percent.

According to a 2016 Harbour Report, which tracks global auto plants’ productivity, the Changwon plant ranked 41st among the 148 factories surveyed. The Gunsan plant placed 130th and the Bupyeong plant 119th.

Industry watchers said the Changwon plant should be assigned the production of a new GM model in order to survive in the future. The U.S. automaker is slated to determine how to assign the production of its new marques in March.

In mid-February, GM announced that it would close the Gunsan plant by May and decide the future of the remaining plants within the following weeks, citing low productivity.

The surprise decision drew flak from the local community, which depends heavily on GM Korea for employment, and also sparked speculation that GM might exit South Korea altogether.

GM Korea requested financial support from the government, saying it will decide its future course of action based on the level of assistance and cooperation from its workers. GM Korea posted an estimated loss of around 600 billion won ($554 million) in 2017.

Yonhap