GM withdrawal rumors swirl again on sell-off of service centers, idle land

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GM withdrawal rumors swirl again on sell-off of service centers, idle land

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The GM logo is seen on the facade of General Motors headquarters in Detroit on March 16, 2021. [REUTERS/YONHAP]

The GM logo is seen on the facade of General Motors headquarters in Detroit on March 16, 2021. [REUTERS/YONHAP]

 
As GM Korea moves to sell its company-run service centers and idle land in Korea following its announcement last Wednesday, speculation about the automaker’s potential withdrawal has resurfaced.
 
But the company has denied any production cuts or exit plans, affirming its intention to continue exporting over 400,000 vehicles annually from Korea to the United States.
 

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Yet experts warn that the plan is not long-term and could change at any time.
 
According to the U.S. publication Automotive News on Friday, GM Chief Financial Officer Paul Jacobson said during an investor conference hosted by Bernstein the previous day that the brand does not plan to immediately reduce vehicle imports from Korea, even in the face of a possible 25 percent tariff under the Donald Trump administration.
 
“We’re optimistic that as the administration continues to work with other countries on bilateral deals, that Korea is going to be an important trading partner,” Jacobson said. “It’s a little bit of a wait-and-see approach.”
 
He also praised business in Korea as “really strong” and noted that “there’s still a lot of opportunity there.”
 
GM Korea CEO Hector Villarreal made similar remarks during a closed-door meeting with union leaders last Thursday, stating that asset sales would have no impact whatsoever on current or future production plans. He reportedly reaffirmed GM Korea's lack of intent to withdraw from the local market.
 
According to the Korea Automobile & Mobility Association, GM exported 418,792 vehicles to the United States out of the 499,559 it produced and sold in Korea last year — accounting for 83.8 percent of the total.
 
GM’s statements suggest that this level of exports will be maintained for at least the next two to three years, possibly through 2027. In 2018, GM promised not to withdraw from Korea until the end of 2027 in exchange for 800 billion won ($581.86 million) in state support following the closure of its Gunsan plant.
 
The main gate of GM Korea’s Bupyeong plant in Incheon. The company announced cost-cutting measures that include the sale of its company-run service centers and idle land at the Bupyeong site on May 28. [JOONGANG ILBO]

The main gate of GM Korea’s Bupyeong plant in Incheon. The company announced cost-cutting measures that include the sale of its company-run service centers and idle land at the Bupyeong site on May 28. [JOONGANG ILBO]

 
Despite tariff pressure, GM appears to favor continued Korean production due to labor cost advantages. Consulting firm Oliver Wyman estimated Korea’s per-vehicle labor cost at $789 in 2024 — just 58 percent of the $1,341 in the United States and lower than Canada’s $968, where GM also operates. Although the Trump administration is pushing for more domestic production in the United States, it appears that the relatively lower labor costs in Korea leave little incentive for GM to shift manufacturing.
 
“Labor costs for research and development in Korea are roughly a third of what they are in the United States,” said Kwon Yong-joo, professor of automotive and transportation design at Kookmin University. “For small vehicles where price competitiveness is critical, Korean production remains advantageous, even when factoring in tariffs.”
 
Still, long-term concerns remain. Mexico, where GM also operates plants, offers geographical proximity and even lower labor costs — about $305 per vehicle, just 38 percent of Korea’s. GM’s exports from Korea dropped 5.6 percent on year in the first five months of 2025, and if small SUVs like the TrailBlazer and Trax Crossover become less competitive in the U.S. market, GM could remodel its Mexican plants to take over production.
 
Meanwhile, GM Korea’s factories in Bupyeong and Changwon, which currently only produce internal combustion engine vehicles, have seen no new investment. While the Trump administration’s pro-fossil-fuel stance may temporarily boost gasoline vehicle sales, the Korean facilities lack capacity or plans for hybrid or electric vehicle production.
 
“Production volumes may hold steady for the next two to three years on the strength of exports to the United States," said Lee Hang-koo, an adviser at the Korea Automotive Technology Institute. “But without model diversification, a shift to future mobility and reduced U.S. dependency, the longer-term outlook is uncertain.”


Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM HYO-SEONG [[email protected]]
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