GM Korea is expected to close its Changwon plant, according to internal company projections. This follows the implementation of a 25% tariff on cars entering the U.S. from 1:01 p.m. (Korean time) on the 3rd, weakening GM Korea's competitiveness. GM Korea exports most of its domestic production volume to the U.S.
According to sources in the finished car industry, rumors are spreading within GM Korea that the company is considering closing the Changwon plant and centralizing production lines at the Bupyeong plant in preparation for U.S. tariffs lasting more than six months.
GM entered the domestic market by acquiring Daewoo Motor's passenger car division in 2002, operating completed car plants in Bupyeong, Incheon, Gunsan, Jeonbuk, and Changwon, Gyeongnam. Subsequently, in 2018, during a reorganization of global operations, GM's headquarters closed the Gunsan plant and sold it to Myungshin, a first-tier supplier of Hyundai Motor Group.
GM Korea is currently manufacturing the Chevrolet Trailblazer, a compact sport utility vehicle (SUV), at the Bupyeong plant. The export-only compact SUV Buick Encore GX and coupe-style SUV Buick Envision are also produced at the Bupyeong plant. At the Changwon plant, the Chevrolet Trax crossover is being produced.
A source in the finished car industry noted, "The Bupyeong plant has a wider range of vehicle types compared to the Changwon plant, so it seems they are looking to consolidate the production lines here. I understand that some production and office workers from the Changwon plant have already been transferred to the Bupyeong plant."
GM Korea is essentially serving as a subcontractor facility for producing vehicles sold in the U.S. Last year, the Bupyeong and Changwon plants produced a total of 499,559 vehicles, of which about 84%, or 418,782 units, were exported to the U.S. The Trailblazer and Trax crossover, which are popular in the U.S., are completely produced in Korea.
GM Korea is in a state of emergency following the inauguration of the Donald Trump administration this year. President Trump imposed a 25% tariff on all imported cars starting on the 3rd. Cars face item-specific tariffs rather than reciprocal tariffs that vary by country, meaning GM must pay tariffs for vehicles produced in Korea when entering the U.S.
After the Trump administration's announcement of tariff imposition, speculation about withdrawal spread, prompting GM Korea to work hard to ease concerns. The GM Korea labor union stated it received word from headquarters that an additional 21,000 units of domestic production would be allocated. Hector Bejarano, president of GM Korea, also remarked at the Cadillac The New Escalade launch event held on the 16th in Gyeonggi Gwangmyeong, "Korea is still an important market."
However, if the tariff imposition prolongs, GM Korea will have no way to avoid deteriorating performance. Therefore, while a complete withdrawal may not occur, the industry predicts there is a high possibility of significant restructuring.
Standard & Poor's (S&P) Global Mobility analyzed that U.S. automakers such as GM, Ford, and Stellantis have many production facilities in the U.S., making it easier to transfer overseas production back to the U.S. If GM Korea's performance significantly worsens, there is a strong likelihood that production facilities will be reduced and some volumes transferred to the U.S.