The Cost of Saving GM Korea? $2.8 Billion, Report Claims

by Steph Willems

Published: February 21st, 2018

the cost of saving gm korea 2 8 billion report claims

Amid frantic restructuring designed to keep General Motors’ money-losing Korean operations afloat, the automaker has proposed a $2.8 billion investment, a new report claims.

According to Reuters, a South Korean government official said GM would invest the funds over the span of 10 years, though not all of that money would come from the automaker’s coffers.

The country’s state-run Korea Development Bank (KDB) holds a 17-percent stake in GM’s Korean subsidiary, and is reportedly being asked to provide $476 million in investment. GM Korea announced the impending closure of its Gunsan assembly plant last week, but hasn’t yet decided the fate of three remaining plants in the country.

On Tuesday, Reuters reported on a seperate $2.7 billion debt-to-equity swap proposed by GM as a way of securing government support, as well as tax benefits. Part of the overall rescue plan includes the production of two new models in South Korea, one lawmaker said. The automaker hasn’t confirmed any of these proposals.

While the proposals seem promising, the government remains wary. South Korea’s trade minister, Paik Un-gy, said on Wednesday that the government wants an audit into GM’s “opaque” management in the country, CNBC reports. It’s hoped an audit will determine if GM’s proposals can truly save the operation.

“By opaque we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM’s headquarters,” Paik told reporters.

Meanwhile, GM’s 14,000 unionized Korean workers are prepared to strike if the automaker decides to pull up stakes in the country, labor boss Lim Han-taek said Wednesday.

[Image: Wikimedia Commons ( CC BY-SA 3.0)]

#GeneralMotors #GM #GMKorea #GovernmentInvestment #Investment #Korea #Overseas

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Manic on Feb 22, 2018

Time to flog the dead horse off to someone. Chinese? Nope. PSA, again? They have enough capacity already. I saw current Renaults re-badged as something when recently in Seoul. Samsung Renault? Maybe they'd need some factories....

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- Big Al from Oz on Feb 22, 2018
  
  Manic, Samsung has close ties to the Renault, Nissan and now Mitsubishi business. So, Samsung cars are Renault/Nissans.
  
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- Bd2 on Feb 27, 2018
  
  @Big Al from Oz Samsung got out of the auto business - only retains a 19.1% share in Renault-Samsung which is subsidiary of Renault. The right to use the Samsung name runs out in 2020; remains to be seen if Samsung will grant Renault an extension (or if Renault has an interest in renewing).
  
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Jeff S on Feb 22, 2018

@Manac--Tata Motors could be a potential suitor. At least the Daewoo cars do not catch on fire like the Tata Nano.

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