GM Shutting Down One of its South Korean Factories

In an effort to slow losses in South Korea, GM has decided to close one of its four manufacturing plants in the country.

The move follows reports that GM might shutter its South Korean operations altogether if a clear path to profitability doesn’t present itself.

The closure will cost GM $850 million thanks to an impairment charge, but GM is moving away from all markets that don’t earn.

GM’s strategy puts profitability and innovation ahead of sales and volume. As a result, the company has exited Australia, South Africa, Russia, and more.

The company, from here on out, will depend largely on the US and China.

South Korea was long a hub for GM, but with production costs in that market rising and the global demand for sedans—which Korea mostly produces—tanking, the market is struggling.

GM’s strategy of exiting unprofitable markets hurt Korea even more, since places like Europe were the main consumer of Korea’s inexpensive sedans.

GM Korea posted net losses of nearly $2 trillion between 2014 and 2016.

Despite the plant closure, GM maintains that it is open to investing in new vehicles for the market.

“If we are successful in working with our stakeholders to restructure and get to a viable cost structure, we would see an opportunity to invest” in new vehicles, said Dan Ammann, GM President.

[source: Reuters]

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