The GM logo is seen on the facade of the General Motors headquarters in Detroit, March 16, 2021. Reuters-Yonhap

General Motors (GM) Korea is facing a survival crisis as the United States prepares to impose a 25-percent tariff on imported vehicles.

The local subsidiary of the U.S. carmaker finds itself in an increasingly difficult position if the tariff plan takes effect on April 3 as announced recently by U.S. President Donald Trump. The concern for the company is especially serious compared to other carmakers here, as it relies heavily on exports to the world's largest economy.

According to GM Korea, its exports to the U.S. accounted for 83.8 percent of its total vehicle production last year. If the tariff is implemented, the company's profitability is expected to deteriorate rapidly.

Experts and industry officials believe that the best-case scenario for GM Korea is to secure a partial exemption from the upcoming tariff.

"GM Korea will have to obtain a partial tariff exemption for a certain portion of its vehicles exported to the U.S.," said Lee Ho-geun, an automotive engineering professor at Daeduk University.

This is crucial for the carmaker to minimize the potential fallout from the tariff, according to the expert.

"If the tariff is imposed without any exemptions, the carmaker has no choice but to withdraw its business and relocate its production lines to other countries," the professor said.

GM Korea's Trax Crossover is shown in this undated photo. Korea Times file

GM Korea sold a total of 499,559 vehicles domestically and internationally last year on solid exports of its two major SUVs — the Chevrolet Trax Crossover and Trax. However, only some 24,800 cars were sold in Korea, accounting for approximately 5 percent out of the total sales.

Moreover, the carmaker's domestic sales dropped by 35.9 percent in 2024 from a year earlier, further raising the likelihood of its swift exit from the Korean market.

Other experts argue that GM Korea's potential exit would be detrimental to the Korean economy, particularly in terms of job creation. GM Korea operates factories in Incheon's Bupyeong District and Changwon in South Gyeongsang Province, with a workforce of 11,000 employees.

Therefore, the best-case scenario for both Korea and GM Korea is to ensure the carmaker continues its operations in the country.

"The government is advised to offer a set of tax or any other form of incentives to GM Korea, so it will be best for both sides to find a middle ground for the continued operations of the carmaker here," said Kim Dae-jong, a professor of business administration at Sejong University.

GM Korea would have to expand unnecessary spending for its potential relocation to other territories, so the carmaker is also expected to request additional support from the Korean government, according to Kim.

Regarding the concerns, an official from the company said, "We will examine various scenarios."

Amid growing concerns over the upcoming tariff, Korea's Ministry of Trade, Industry and Energy is set to unveil a set of emergency measures to help carmakers minimize the impact of the U.S. tariff, expected to be announced in April.