GM shifting Australian car-making to Korea: report

UPDATED 14:30 AEST GENERAL Motors is gearing up to shut down its car-making operations in Australia, and instead import them from South Korea, US media is reporting.

The Wall Street Journal this week reported that as part of a review of its most troubled international operations – according to unnamed sources “familiar with the auto-maker’s plans” – GM intends to transfer production of the Cruze small car to South Korea in a move that would “likely” see an end to Holden’s production operations in Australia.

When asked for comment, Holden executive director of corporate affairs George Svigos told GoAuto that the company did not comment on speculation.

Like Australia, South Korea has been a high-cost thorn in the side of GM’s global production as it struggles with soaring wage rises, growing worker unrest and the ever-present threat of North Korea. In contrast, Holden is struggling with a high dollar, tight margins on low-priced vehicles, and fierce competition from imports.

The US car-maker had previously flagged that Korea would not make the next-generation Cruze due in 2016 but instead continue to make the current model for emerging markets. That would have left Australia as a key source of the fully redesigned new model.

However, the WSJ report indicates GM is now planning to centralise Cruze production for the region in South Korea.

“There isn’t a current plan to build the next-generation Delta (Cruze) in Korea, which has been publicly disclosed,” Holden chief executive Mike Devereux told GoAuto in August.

Mr Devereux said the plan was for Korea to keep building the Cruze based on its current shape “for some period of time”.

The WSJ report said GM planned to cut about 20 per cent of Korea’s global new-car output by 2016 – the expected timing of Holden’s closure of local car-making operations in Australia – as well as close an Opel plant in Germany and withdraw the Chevrolet nameplate from Western Europe.

GM is focusing heavily on its loss-making Consolidated International Operations division, which includes its Holden subsidiary in Australia.

The global car-maker recently announced its third-quarter result for the 2012-13 financial year, reporting a $US700 million profit, well down on the $US1.5 billion it had earned in the previous year.

Part of that downward spiral in income was attributed to a pre-tax earnings drop for CIO – down to $US300 million ($A330 million) from $US800 million for the same period last year.