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GM Korea to invest US$667 mln as planned amid virus woes

Economy 13:26 July 02, 2020

SEOUL, July 2 (Yonhap) -- GM Korea Co., the South Korean unit of General Motors Co., said Thursday it will invest 800 billion won (US$667 million) as planned in the coming years, despite the new coronavirus outbreak.

GM Korea President and CEO Kaher Kazem reaffirmed the company's commitment during his visit to the company's plant in the southern industrial city of Changwon on Wednesday.

The Detroit carmaker has three Korean plants -- two in Bupyeong and one in Changwon -- whose combined output capacity reaches 630,000 units a year.

"The company plans to invest about 800 billion won in the paint shop and other facilities of the Changwon plant for four to five years (starting in 2019) to produce a new crossover utility vehicle there beginning in 2023," a company spokesman said over the phone.

GM Korea announced the investment plans in 2018.

In this photo taken July 1, 2020, and provided by GM Korea, GM Korea President and CEO Kaher Kazem (L) bumps fists with an employee in the carmaker's plant in Changwon amid the coronavirus outbreak. (PHOTO NOT FOR SALE) (Yonhap)

In May 2018, GM and the state-run Korea Development Bank (KDB) signed a binding agreement that will permit a combined 7.7 trillion-won lifeline -- 6.9 trillion won from GM and 810 billion won from KDB -- to keep the Korean unit stay afloat. GM owns a 77 percent stake in GM Korea.

Under the deal, GM is banned from selling any of its stake in GM Korea before 2023 and is required to keep its holding in the unit above 35 percent until 2028.

Kazem also shared the company's current financial status and challenges ahead with employees in the Changwon plant in what appears to be efforts to seek support from the union ahead of negotiations for this year's wage and collective agreement deal that begins soon.

From January to June, GM Korea's sales fell 28 percent to 166,038 vehicles from 231,172 units in the year-ago period.

To revive sales, the company plans to introduce 15 new vehicles in the local market for the five years through 2023.

GM Korea's Chevrolet lineup is composed of the Spark minicar, and the Malibu sedan; the Trax, Trailblazer, Equinox and Traverse SUVs; the Colorado pickup; the Camaro sports car; and the Bolt all-electric vehicle.

The Bolt EV, Equinox, Camaro, Colorado and Traverse are from the United States, while Damas and Labo commercial vehicles, Malibu, Trax, Trailblazer, and Spark are made locally.

kyongae.choi@yna.co.kr
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