GM Korea in red for 7 yrs to idle Bupyeong plants for a week on chip shortage

[Photo by Han Joo-hyung]

GM Korea could be the next carmaker under foreign ownership in Korea facing a bumpy road to sustain operation after SsangYong Motor that went under bankruptcy court as its bottom line worsens from seven-year losses, labor conflict and lately production disruption from chip shortage.

GM Korea incurred an operating loss of 316.9 billion won ($283 million) in 2020 on sales of 8.5 trillion won, the company confirmed on Thursday. Net loss reached 296.8 billion won.

Sales inched up 0.5 percent from a year ago on tax incentives for new car purchases and a hit by SUV Trailblazer.

GM Korea has been in the red since 2014. Cumulative operating loss reached 3.4 trillion won and cumulative net loss 5.06 trillion won.

The company last year sold a total of 368,453 vehicles at home and abroad, down 11.7 percent from a year ago. Compact sport utility vehicle Trailblazer that sold more than 20,000 units drove the growth of domestic sales but failed to offset the sales plunge in overseas market under the pandemic.

Union strikes that disturbed production of more than 20,000 cars at the end of last year widened losses.

Outlook for this year is no better amid chip shortages.

GM Korea announced on the same day that it would plug off its Bupyeong first and second plants in Incheon for a week from April 19 to 23 due to the global-wide microchip shortage. It has already been running on half of its full capacity at the second plant since Feb. 8.

Chip shortage has begun to take toll on larger Korean producers as well.

The country¡¯s largest automaker Hyundai Motor Co. will close factory in Asan again on April 19-20 after the two-day shutdown on April 12-13 due to the automotive chip shortage. With the shutdown, manufacturing line for Sonata and Grandeur sedans will be idled and production of about 1,000 vehicles is expected to be disturbed.

Hyundai Motor temporarily suspended production at the Ulsan first factory dedicated for electric vehicles models Kona and Ioniq 5 for a weeklong April 7-14. The company now is closely watching the microchip inventory level to avoid further disruption.

SsangYong Motor under court-led receivership also shuttered the Pyeongtaek plant for a week on April 8-16.

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