GM’s $7.3 Billion Investment in Korea to Focus on Small-Car Development

General Motors is investing 8 trillion won  ($7.3 billion) over the next five years in its South Korean subsidiary that will focus on mini- and small-car development, says Tim Lee, GM vice president-global manufacturing and president of international operations.

A source at GM Korea tells WardsAuto most of the investment will be devoted to product development, rather than brick and mortar, but it will include doubling the size of the present design center in Bupyeong, which will be completed by the end of the year.

Lee tells reporters in Seoul “GM Korea will continue to play a major role in our global growth plans” and that the latest investment will help the auto maker “continue to develop globally competitive products that exceed customers’ expectations at home and abroad.”

GM Korea President and CEO Sergio Rocha says the investment program will make GM Korea “reborn as a more competitive auto maker. “Based on our first 10 years of accomplishments, GM Korea has now begun a new era for the next decade and beyond.”

Lee and Rocha both say GM Korea will continue its focus on developing mini and small cars through investment in a portfolio of cost-competitive new vehicles and powertrains for Korea and world markets.

They also disclose that GM Korea will produce six next-generation GM global vehicles and powertrains, including the U.S. auto maker’s first global full-battery EV, as well as a global mini, small and midsize vehicles.

GM Korea competes with 167 other GM production facilities to win the business and has plans to increase its competitiveness by improving quality control and cost competitiveness, the executives say.

And for the first time, Lee and Rocha confirm the importance of GM Korea’s complete-knocked- down production and export business. The subsidiary exported 1.27 million CKD kits in 2012 and has “set global CKD capability enhancement as one of the company’s core elements.”

“GM Korea will seek to make its CKD business the benchmark for GM’s worldwide operations by reducing costs, improving productivity, carrying out alternative sourcing and other means,” the company says in a statement.

In other developments, the new vehicle design center in Bupyeong, which employs 200 designers and modelers, will double in size, but the number of designers to be added has not been announced.

GM Korea’s advanced design center in Seoul will continue to operate as a distinctive forward- looking unit that explores highly advanced new vehicle design and propulsion concepts, a spokesman tells WardsAuto.

The investment announcements are seen by analysts as positive and allay concerns that GM might consider moving manufacturing of some key products out of Korea and downsize the auto maker’s operations.

GM Korea’s workers union has demanded that GM reveal its medium- and long-term plans for the company, concerned about possible job losses if production were to contract. There was no immediate response from union officials regarding the new investment plans.