GM Korea Predicts Profit Next Year; Banks Less Optimistic

Despite only barely holding onto life by the skin of its teeth, GM’s South Korean unit is expecting a speedy turn around. With investments in a new, small SUV and a crossover, GM Korea expects to return to profit in 2019.

Both the small SUV and the crossover would be designed for the local market and export. GM Korea expects to invest $2.8 billion in their development.

Despite that, the nation’s state-run Korea Development Bank is less optimistic, though it too predicts a return to profitability. The bank only expects GM Korea to be profitable in 2022, though, and even then it expects the gains to come largely from cuts in labor costs.

GM Korea’s future was in doubt up until very recently, when a rescue package agreed to between GM and South Korea worth $7.15 billion saved the company.

A central pillar of the plan to save the South Korean, it must be said, was development of the new crossover and SUV. It will be crucial for the unit to come back to profitability, though, since that has become the ultimate arbiter for GM, which is pulling out of markets left, right, and center in an effort to cut losses.

“GM Korea now has the right fundamentals to grow a successful business in Korea for the long term,” said Kaher Kazem, the unit’s CEO, in a statement.

[source: Automotive News]

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