Seoul – In South Korea, the 25% price of the Trump administration on imported cars sent local car manufacturers Hyundai and Kia rushing to protect one of the most precious exports in the country. But General Motors, who sent last year 418,782 units From its factories here to American consumers – or 88.5% of its total sales – can be faced with a difficult situation.
Unlike Hyundai and Kia, which control more than 90% of the internal market here, the automotive manufacturer based in Detroit produces budgetary SUVs such as the Chevrolet Trax or the Chevrolet Trailblazer almost exclusively for the American market. The trax has been the most exported car in South Korea since 2023.
This business model has made GM, which operates three factories and employs some 11,000 workers in the country, uniquely exposed to Trump automobile rates, closing long -term concerns in the local automotive industry that the company could finally pack and leave.
Up to the prices of last month, cars sold between the United States and South Korea were not accelerated as part of a bilateral free trade agreement. This helped South Korea become the third largest car exporter to the United States last year $ 34.7 billion – or about half of its total automobile exports. On the other hand, South Korea only bought $ 2.1 billion in cars in the United States
Earlier this month, GM leaders estimated that prices would cost the company up to $ 5 billion this year, adding that the company would stimulate production in its American factories to compensate for the blow. With additional factories in Mexico and Canada, GM currently imports around half of the cars it sells in the United States
“If the American rates remain in place, GM will no longer have any reason to stay in South Korea,” said Lee Ho-Guen, professor of automotive engineering at Daeduk University.
“Prices can increase up to $ 10,000 at the price of cars sent to the United States, while GM sells less than 50,000 units per year in South Korea. There is very little room for them to adjust their strategy. ”
Kim Woong-Heon, an official of the GM Korea labor union, said that the union was approaching current rumors of the potential exit of the company with a dose of caution, but added that wider concerns about the long-term commitment of the company remain in the long term.
“The cars we manufacture here are at the lowest end of the GM price range, so labor costs will immediately move production in the United States,” he said.
“But we have painful memories of the closure of GM one of its factories in 2018, so we are nervous every time these rumors surface.”
GM Chevrolet Automobiles to the export seated parked at the port of Incheon in South Korea.
(Seongjoon Cho / Bloomberg via Getty Images)
This is not the first time that GM's prospects in the country have been in question. The company was established for the first time in South Korea in 2002 by acquiring the Daewoo Motor Co. bankruptcy in an agreement supported by the government that some at the time criticized as “GM by taking the cream of Daewoo for almost nothing”.
Folling to compete with Hyundai, GM has briefly positioned as a production base for European and Asian markets until its bankruptcy in 2009.
In the midst of global restructuring efforts that followed, concerns about the closure of its South Korean operations led the government to intervene again. In the end, GM remained after receiving $ 750 million in funding from the country's development bank provided that it remains open for at least 10 years more.
But in 2018, the company closed its factory in the city of Gunsan, which had employed around 1,800 workers, and detached itself from its research and development unit from its manufacturing base – a decision that many considered the company by strategically placing a foot.
In February, shortly after President Trump announced the 25% prices cars made abroadPaul Jacobson, GM financial director, suggested that the company could once again face just as difficult decisions:
“If they become permanent, then there are a lot of different things you should think in terms, where you allocate the plants and move the plants.”
In recent weeks, GM Korea leaders have sought to appease rumors that the South Korean operations of the company are affected.
“We do not intend to respond to rumors on the release of the Korea company,” said Gustavo Colossi, Vice-President of GM Korea sales at a press conference last month. “We plan to move forward with our sales strategies in Korea and continue to launch new models in the coming weeks and months, by introducing new GM offers on the market.”
The union says that the two finished car factories of the company operated at full capacity, with 21,000 additional units recently allocated to the Incheon factory, a city off the west coast of the country – a panel that business will continue as usual for the moment.
But with the GM 10 year warranty to expire in 2027, Kim, the union official, said their requests for measures that prove the company's commitment beyond those who were unanswered.
These include manufacturing electric and rechargeable hybrid vehicles in GM in the South Korean factories, as well as putting a larger range of its products for sale in South Korea and other Asian markets.
“If the company intends to continue its operations here, it must make its commercial model more sustainable and no more than depending on imports in the United States,” said Kim.
“This will be our basic request during this year's salary and collective negotiation negotiations.”
GM's immediate prospects in the country will depend on the current pricing talks between us and South Korean officials who started last month in order to produce an agreement by July 8.
Although the South Korean Minister of Commerce Ahn Duk-Geun stressed that the cars are “the most important part of the South Korean trade relationship”, little expect that Seoul is able to finish the type of agreement given to the United Kingdom, which obtained last week a Rate of 10% Of the first 100,000 vehicles shipped to the United States each year.
Unlike South Korea, which posted a trade surplus of $ 66 billion with the United States last year, the United Kingdom buys more from the United States it does not sell. And many of the cars he sells in the United States are luxury vehicles such as Rolls-Royce, which Trump has differentiated “monster automotive companies” which make “millions of cars”.
“At one point after the next two years, I think it is very likely that GM will leave and will only keep their research and development unit here, or at least considerably reduced their production,” said Lee, a car teacher.
In the south-eastern port city of Changwon, which houses the two GM finished car factories, local officials hesitated to give air to what they describe as a premature fear.
But Woo Choon-Ae, a 62-year-old real estate agent whose customers also include GM workers and their families, cannot help worrying.
She says that the release of the company would be devastating for the city, which, like many rural areas, has already been under pressure from the decline in the population.
GM employs 2,800 workers in the region, but represents thousands of other jobs in its suppliers. The Changwon factory, which manufactures the trax, represented around 15% of the city's total exports last year.
“People work for GM because it offers stable jobs until retirement age. If they close the factory here, all these workers will leave to find work in other cities, which will be a critical blow for the housing market, “she said.
“Houses are the way people save money in South Korea. But if people's savings are suddenly divided by two, who will spend money for things like eating outside? ”
