New-Gen Cruze Job Lifts GM Korea Workers’ Spirits

Local sales of the Korean-made, new-generation ʼ17 Chevrolet Cruze launch next month, union sources say.

Serial production already is under way at the Gunsan plant, where 2,000 workers have been working on drastically reduced schedules, producing diesel engines and small volumes of the slow-selling Orlando MPV.

A GM Korea spokesman declines to comment on the timing of the sales launch, telling WardsAuto, “As a company policy, we do not discuss future product plans publicly.”

Workers at Gunsan and their labor union are banking on sales of the Cruze to revive their plant, refill their pocketbooks and restore their pride, union leaders say.

The union says in the first eight months of 2016 Gunsan workers were scheduled for only one or two days’ work per week, mostly to produce sales inventory for the outgoing Cruze, the Orlando and diesel engines.

The Orlando is Korea’s top-selling MPV but is not a large-volume vehicle. In November it sold 1,527 units, a year-over-year increase of 4%. The plant has capacity to produce that many vehicles in a couple of days on a 2-shift basis.

The GM Korea spokesman will not comment on work schedules, but does confirm that for the first 11 months of the year the automaker sold only 9,694 units of the Cruze in Korea, a drop of 36% from 15,164 sold in like-2015.

Exports of the outgoing Cruze were down 64% in the first 11 months with 10,283 vehicles shipped, compared with 28,497 in the first 11 months of 2015.

The spokesman also won’t comment on sales targets for the new Cruze or whether GM Korea can capture 10% of the local market this year, its often-stated goal over the past eight years.

The automaker was virtually there at the end of November, holding 9.9% of the market against its four domestic rivals and a slew of import sellers. But gaining any degree of market share will be challenging.

Hyundai’s Avante, known elsewhere as the Elantra, leads the market in sales volume, followed by Kia’s K3, or Forte.

Both of them undercut the base price of the current model Cruze, which is 17.5 million won ($15,000). Avante and K3 prices virtually are identical – roughly 14 million won ($12,000). From its inception in 2007, when the Cruze was developed and designed by GM Korea and had its global launch in Korea as the GM Daewoo Lacetti Premier in 2008, the vehicle always has contained a high level of appointments as standard equipment, packing into a compact vehicle many features found only in larger, more expensive competing models.

Unfortunately for the Gunsan plant, GM International initially chose not to build the next-generation Cruze in Korea. This decision was made known in 2013 after GM announced it was pulling most of GM Korea-built Chevrolet models out of European markets.

The Gunsan workers’ union was advised GM Korea would continue producing the existing Cruze for local markets and export. However, during 2014 labor negotiations it was agreed Gunsan would be among the plants producing the new-generation Cruze, beginning in 2017.

But the union and its workers suffered another setback in 2015, when GM International decided to stop exporting the Korea-built Cruze to Mexico and instead invested $350 million in the Ramos Arizpe plant that will build the all-new Cruze hatchback..

That cut into production from the struggling Gunsan plant, which had shipped 7,870 units of the Cruze to Mexico in 2014 – close to what GM Korea has sold in the home market in the first 11 months of 2016.

GM announced in June it would begin exporting the all-new, Mexican-made Cruze hatchback to the U.S. Production of the Cruze sedan, which saw sales drop 21% for the year’s first 11 months compared with like-2015, will continue at the Lordstown, OH, plant.

The Cruze, once the crown jewel of GM Korea, which had won the decision to design and develop it over all other GM design and engineering centers, is being produced at home in its next-generation version for the Korean domestic market and selected export markets.

GM Korea will not comment on current production rates at the Gunsan plant, but analysts believe they at least are double the amount built on reduced schedules through August, which would mean it is operating at better than 50% capacity. Sales volumes of the next-generation Cruze are up and are expected to increase in 2017.

GM Korea officials are saying little about the launch of the Cruze because they don’t want to divert market attention from the new, Korea-produced Malibu, which is selling at record levels since its official sales launch in the country in November.