General Motors Co.'s Chief Financial Officer Chuck Stevens said the agreement reached last week by the carmaker's South Korean unit will lay the foundation for a turnaround next year, GM Korea Co. said Monday.
In a conference call to talk about its first-quarter results, Stevens said GM Korea will be able to reduce costs by $400-$500 million a year by shutting down one of four car assembly plants in Korea and reorganizing the overall workforce.
He said GM Korea, under a package of restructuring measures, is expected to make a profit from 2019 onward based on various cost-cutting efforts. GM owns a 77 percent stake in GM Korea, with the state-run Korea Development Bank and SAIC Motor Corp. controlling 17 percent and six percent, respectively.
The logo of GM Korea is seen at its Bupyeong plant in Incheon, South Korea March 12. (Reuters)
From 2014-2017, GM Korea posted 3.134 trillion won ($2.93 billion) in accumulated net losses due to a lack of new models and lower demand.
To help buoy sales in Korea, GM Korea plans to import the Chevrolet Equinox sport utility vehicle from the US beginning in June amid a rising demand for SUVs, a company spokesman said.
The Equinox midsize SUV will be displayed at the Busan International Motor Show, which opens on June 7 in Busan, 450 kilometers south of Seoul, the company said.
GM produces the Equinox equipped with a 2.0-liter gasoline turbo engine, a 1.5-liter gasoline turbo engine, or a 1.6-liter diesel-powered engine in the US The 1.6-liter model sells at the lower end of $30,000 in the world's most important vehicle market.
At what prices the Equinox will be sold in Korea and other details will be released later, the spokesman said.
GM Korea also plans to launch the face-lifted version of the Chevrolet Spark city car in May or June to boost local sales, he said.
On Thursday, GM signed a conditional agreement with the KDB to help resolve the liquidity problems facing the carmaker.
In the deal to be finalized early next month, GM and the KDB agreed to inject a combined 7.7 trillion won -- 6.9 trillion won from GM and 810 billion won from the KDB -- into the financially troubled company so it can continue operating and plan a course for future growth. (Yonhap)
