GM likely to cut Korea output by nearly 20 pct in 2015 -IHS Automotive

SEOUL Thu Dec 5, 2013 12:57am EST

SEOUL Dec 5 (Reuters) - General Motors Co is likely to cut the number of cars it makes in South Korea by nearly 20 percent in 2015 compared with 2013, said industry researcher IHS Automotive.

The U.S. automaker has raised concerns about wage costs, labour relations and geopolitical tension with North Korea, giving rise to speculation it could shift operations which account for a fifth of global production.

In August, three people familiar with GM's thinking told Reuters the pullout had already begun.

GM's South Korean factories could produce 650,000 vehicles in 2015 compared with 800,000 vehicles this year, according to a forecast IHS Automotive emailed to Reuters.

IHS expects GM to move a large portion of the production of its Mokka sport-utility vehicle to Spain starting next year, and stop producing the Gentra small car and Damas and Labo commercial vehicles in Korea by year-end.

"GM Korea's volume decline is seen as inevitable," IHS senior production analyst Ian Park said in the email.

Production is likely to fall even more after 2015 because GM said it will make the next-generation Cruze car and perhaps the new Aveo small car elsewhere, Park said.

GM spokesman Park Hae-ho declined to comment on the IHS projection. "We don't discuss future production plans in public due to competitive reasons."

GM Korea, which makes most of the Chevrolet cars sold in Europe, has already reduced output this year at its factory in the southeastern city of Gunsan because of sluggish European demand.

It plans to produce about 147,000 vehicles next year at the 260,000 vehicle-capacity plant, in what the labour union termed "a gravely serious situation."

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