On Friday, GM Korea Co., a South Korean subsidiary of General Motors, said its February sales dipped 19 percent, affected by its move to close one of its factories in the country.
The Detroit-based carmaker has also said that in the coming weeks it will make its decision on the future of its three remaining factories in South Korea, as it hopes a politically combative restructuring of its loss-making units.
GM Korea reported sales of 36,725 vehicles in February, which includes both domestic sales and overseas exports, down from 45, 366 units a year earlier.
Domestic sales slid 48 percent to 5,804 units last month from 11, 227 a year ago. Exports fell 9.4 percent to 30,921 units from 34, 139 during the same period, the company said.
According to a GM Korea dealer in Seoul, the company’s decision to close has impacted its image, and customers are worried about services and salvage values.
GM Korea lags behind Hyundai Motor, which is South Korea’s top automaker, and second-ranked Kia Motors, with a market share of 7 percent compared to the combined market share of 68 percent of Hyundai and Kia, the government data showed.
GM Korea Reports Operating Loss
South Korea’s financial regulator said this week that GM reported an operating loss of 800 billion won, or $740 million, in 2017, which is the fourth successive year of losses after being hit by GM’s withdrawal of the Chevy brand from Europe in 2013.
In 2014, GM Korea’s operating loss was 148.6 billion won, with the numbers increasing to 594.4 billion won in 2015 and 531.2 billion in 2016. In terms of sales, the company was the lowest since the 2008 global financial crisis, with 10.7 trillion won.
The lack of interesting lineup, coupled with low transparency levels in management, are being cited as factors of the company’s weak sales, along with an abnormally high sales cost.
Industry watchers said the fact the automaker paid huge interest on loans given by headquarters and the financial load it carried in terms of R&D is not making GM look any better.
GM Korea’s second-largest shareholder, Korea Development Bank, is currently investigating GM Korea’s financial records to know the support it can provide or should be given.
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