GM Korea CEO dismisses exit rumors amid looming US tariffs

Korea Herald

02-04-2025

Over 85% of Korean production ships to US, putting cost competitiveness at risk
GM Korea CEO Hector Villarreal has dismissed concerns over the company's potential withdrawal from South Korea, just three days before US President Donald Trump's 25 percent automotive tariffs on imported vehicles and parts are set to take effect.
According to GM Korea on Wednesday, Villarreal held a 20-minute online meeting with office staff on Monday — his first public remarks addressing speculation about the company's possible exit from the Korean market.
'The company plans to continue its business without any changes,' Villarreal said, emphasizing that operations at its Bupyeong (Incheon) and Changwon (South Gyeongsang Province) plants remain stable despite the looming tariffs.
He also assured employees that any changes to production plans would be communicated promptly, adding that GM Korea is 'continuously preparing various scenarios' to address the evolving tariff situation. Villarreal also highlighted the importance of regulatory compliance and reducing unnecessary costs.
His comments come amid growing uncertainty over GM Korea's future, as the US automaker faces steep import tariffs that could significantly disrupt its core export business. GM Korea shipped approximately 419,000 units to the US last year — 84.8 percent of its total production — far surpassing the export ratios of Hyundai Motor and Kia, which stood at 46.6 percent.
The Korean unit currently produces compact SUVs, including the Trailblazer, at the Bupyeong plant and the Trax Crossover at the Changwon plant. It has long leveraged Korea's efficient supply chain, a legacy from its origins as part of Daewoo Group. GM acquired Daewoo's passenger car division, R&D assets and facilities in 2002, operating as GM Daewoo until a 2011 rebranding to GM Korea.
However, the new tariffs are expected to challenge the company's cost-effective export strategy, potentially slashing its price competitiveness in the US market.
Industry analysts warn that GM's headquarters in the US may re-evaluate the viability of its Korean unit, possibly considering a gradual phase-out of local production or even a full withdrawal from the country.
GM Korea previously closed its Gunsan plant in 2018 after its operation rate fell to around 20 percent due to a prolonged domestic sales slump. At the time, the Korea Development Bank injected 810 billion won ($552.6 million) on the condition that GM would maintain its Korean operations for at least 10 years.
Despite a low market share in Korea's domestic auto market, GM Korea has served as a key export hub to the US — a position now under threat.
'When the automaker shut down its Gunsan facility, thousands lost their jobs, including around 1,800 direct employees and even more from partner companies,' said Lee Kang-koo, head of the Jeonbuk Institute of Automotive Convergence Technology. 'If GM decides to shut down its remaining plants, the repercussions on the local economy would be severe.'
Lee added that while Hyundai and Kia are expanding their North American production capacity with over 100 Korean partner companies, GM may instead focus on ramping up its US-based operations through existing partnerships.
GM Korea currently employs more than 11,100 executives and staff, and over the past 21 years, it has produced around 26.5 million fully and partially assembled vehicles.