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Doubts remain on GM Korea future after Trailblazer

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GM Korea CEO Kaher Kazem, left, and GM Korea labor union head Kim Seong-kab, second from left, with the Trailblazer during the SUV's launch event at the Paradise City hotel in Incheon, Thursday. Courtesy of GM Korea
GM Korea CEO Kaher Kazem, left, and GM Korea labor union head Kim Seong-kab, second from left, with the Trailblazer during the SUV's launch event at the Paradise City hotel in Incheon, Thursday. Courtesy of GM Korea

By Nam Hyun-woo

INCHEON ― Despite Thursday's release of the Trailblazer, a compact sports utility vehicle (SUV) in South Korea, doubts remain over General Motors' South Korean affiliate GM Korea's future in the country.

The SUV release is part of GM Korea's promise to use the country as a manufacturing base, in return for $750 million of government aid in 2018.

But uncertainty remains over whether the company will embrace South Korea, as GM Korea is yet to present detailed business plans on eco-friendly model production here, which would be critical for its mid- to long-term survival.

During the launch event, GM Korea CEO Kaher Kazem said: "The Trailblazer is an important model that represents more than just a new product." The event took place at the Paradise City Hotel in Incheon. Attendees included Incheon Mayor Park Nam-chun and Rep. Hong Young-pyo of the Democratic Party of Korea.

"The Trailblazer is a global SUV designed, engineered and manufactured right here in Korea, which will be sold to export markets around the world and to the domestic market," Kazem said. "This launch also marks an important milestone in GM Korea's journey, demonstrating a commitment to our Korean operations and investing for the future."

The 4.42-meter long Trailblazer sits on a chassis using POSCO's Giga Steel, known for its strength and light weight. Its engines ― a 1.2 liter E-Turbo Prime gasoline and a 1.35 liter E-Turbo gasoline ― also focus on lighter weight and fuel efficiency.

Hit by a slowdown in sales, GM Korea closed its plant in Gunsan, North Jeolla Province. Given the significance of the regional city in terms of the politics to President Moon Jae-in and the ruling Democratic Party of Korea (DPK), the state-owned Korea Development Bank provided GM Korea with aid. In return, the company pledged to produce two vehicles for the global market ― the Trailblazer and a compact crossover in 2022.

Analysts and GM Korea employees say, however, the two vehicles' production does not guarantee GM Korea's long-term future, and the production of electric vehicles (EVs) in either the Incheon or Changwon plants will be critical, given the headquarters' move to scale down its combustion engine portfolio.

During the launch, new GM Korea labor union head Kim Seong-kab said: "The Trailblazer will be the stepping stone for GM Korea's normalization," but the headquarters still has "social responsibility," which it owes to Korea when GM Korea took the government aid. Kim, elected in December, has been calling for GM Korea's plants to prepare for EV production, citing the rising demand for eco-friendly cars.

Regarding the specifics of GM Korea's plans to manufacture EVs, Kazem didn't elaborate but only reiterated that GM will introduce more EVs here.

"Electrification will not be a matter of choice in the future, but the chance of GM Korea producing EVs in Korea does not seem to be very high," an industry official said, asking not to be named.

"Most of the parts for the Chevrolet Bolt EV are produced in Korea, but they are assembled in the U.S. Adding to this, General Motors and LG Chem agreed to set up an EV battery joint venture in the U.S. GM Korea's chance of producing EVs is getting slimmer."

Analysts said this is one of the reasons why GM's pledge for a long-term stay in Korea is facing doubts.

Last year, GM Korea set up a R&D spin-off, GM Technical Center Korea, despite lawmakers and union opposition that it was a prelude for GM's withdrawal from Korea. Also, the company registered it as an import car brand to the Korea Automobile Importers and Distributors Association, drawing suspicions that it may reduce domestic output further.



Nam Hyun-woo namhw@koreatimes.co.kr


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