Hector Villarreal, president and managing director of GM Korea, visits the company’s Changwon plant on May 15 to encourage employees and oversee on-site operations. (GM Korea)
Hector Villarreal, president and managing director of GM Korea, visits the company’s Changwon plant on May 15 to encourage employees and oversee on-site operations. (GM Korea)

GM Korea, the South Korean unit of General Motors, said Wednesday it will dispose of non-core assets and directly managed service centers as part of its efforts to sustain operations amid weak demand for its vehicles.

In response to a rapidly evolving industry landscape and global business challenges, the company said in a press release that it will begin consultations with relevant stakeholders to secure financial sustainability in the Korean market.

GM Korea plans to gradually sell all nine of its directly operated after-sales service (AS) centers. However, all employees at these centers will be reassigned to other divisions within the company, it said.

"Unlocking value from surplus assets and eliminating loss-making service operations are critical to supporting ongoing sustainability," Hector Villarreal, president and managing director of GM Korea, said.

The company also plans to sell idle properties and facilities within its main Bupyeong plant, located just west of Seoul. It emphasized that the planned asset sales will not affect production at the facility.

"Our current vehicle programs still have many years to run, and these actions are important to ensuring GM Korea is running as efficiently as possible," he said.

Despite the planned sale of the directly managed service centers, GM vehicle owners will continue to receive after-sales services through the company's 386 contracted AS centers nationwide, the company said.

The move comes amid growing concerns over a potential withdrawal by GM from the South Korean market, driven by shifting US tariff policies.

However, the company dismissed the possibility of such a move.

"These actions are aimed at ensuring our business operates as efficiently as possible and remains an attractive destination for investment," a company official said.

Speculation over GM's possible exit from South Korea has mounted following the imposition of a 25 percent tariff on imported vehicles by the United States since April, compounded by the automaker's lack of new models and sluggish sales.

Detroit-based GM currently operates two plants in South Korea: one in Bupyeong and another in Changwon, 296 kilometers southeast of Seoul.

The Bupyeong plant manufactures the Trailblazer sport utility vehicle (SUV), while the Changwon factory produces the Trax Crossover for both domestic sale and export.

In the January–April period, GM Korea's total vehicle sales declined 9.1 percent to 154,161 units, down from 169,638 a year earlier. About 85 percent of its vehicles are shipped to the US. (Yonhap)