Normal Motors is below strain to make clear its plans for the way forward for a key manufacturing hub in South Korea, because the nation’s commerce talks with the Trump administration to mitigate steep automobile tariffs stay unresolved.
GM Korea’s two carmaking vegetation produce reasonably priced compact autos, principally for the North American market, accounting for practically 17 per cent of the group’s US car gross sales.
That places the Detroit auto firm on the coronary heart of Donald Trump’s commerce conflict, with executives relying on Washington to strike a cope with Seoul that might decrease a 25 per cent tariff imposed in April.
If talks fail, analysts say it will require a significant rejig of GM’s world manufacturing footprint, following retreats from Europe, Vietnam and Australia previously decade.
The corporate warned in Might that Trump administration tariffs may scale back its adjusted income by as much as $5bn this 12 months, of which $2bn can be as a result of tariffs imposed on autos imported from South Korea.
“We’re very worried about the possibility of GM’s exit from Korea,” stated Ahn Kyu-baek, chief of GM Korea’s labour union, which is threatening a walkout over pay and administration’s plan to shut down native service centres and dump underused land and belongings.
GM Korea was established in 2002, following the group’s acquisition of the carmaking belongings of the bankrupt Korean conglomerate Daewoo, within the aftermath of the Asian monetary disaster of the late Nineties.
Nonetheless, the enterprise has lengthy struggled with rising labour prices, in addition to overcapacity ensuing from GM scaling again its world ambitions within the wake of the worldwide monetary disaster in 2008. In 2018, GM Korea obtained a bailout from the South Korean authorities within the type of a capital injection from the state-owned Korea Growth Financial institution (KDB).
Ahn stated Normal Motors had made a dedication to remain in Korea throughout the 10-year bailout deal. “They may not leave the country immediately, but they seem to be preparing to leave in 2028 after their agreement with the KDB expires,” he stated.
GM Korea declined to touch upon hypothesis concerning the firm’s future. The carmaker and the Korea Growth Financial institution each declined to touch upon the contents of the 2018 bailout settlement.
Pushed by the recognition of its compact Chevrolet Trax Crossover and Trailblazer fashions within the US, GM Korea offered 499,559 autos in 2024, its highest complete since 2017 and a 6.7 per cent improve over the earlier 12 months, regardless of home gross sales in Korea falling by 36 per cent.
General gross sales have since declined by greater than 7 per cent within the first 5 months of 2025 in contrast with the identical interval final 12 months. Nonetheless, at a Bernstein convention in late Might, Paul Jacobson, GM’s chief monetary officer, stated the corporate wouldn’t rush to make a long-term resolution on its Korean operations, saying it was hopeful tariffs can be lowered.
“The business we have over there is really strong. The vehicles have probably never been better in terms of what we’re bringing over. And I think there’s still a lot of opportunity there,” he stated.
A tariff deal has proved elusive, nevertheless. This month, Yeo Han-koo, South Korea’s commerce minister, repeated Seoul’s name for the removing of US tariffs on South Korean auto imports, after the 2 nations failed to succeed in an settlement forward of a US deadline. The talks are being prolonged with a brand new deadline of August 1.
Kim Pil-soo, professor of auto engineering at Daelim College in Seoul, famous GM Korea had loved restricted success within the South Korean market, with 85 per cent of its output offered within the US. That has left it much more uncovered to tariffs than fellow Korean carmakers Hyundai and Kia, each of which have a producing presence within the US.
“If the 25 per cent tariffs are maintained, GM Korea can’t survive and the factories will be closed,” stated Kim. “If, however, tariffs fall below 10 per cent, GM can absorb the shock by raising prices and cutting costs.”
Dan Levy, an equities analyst at Barclays, wrote in a analysis be aware that, of the three large Detroit-based carmakers, “GM would see the most negative impact from an ‘unfavourable’ trade deal with South Korea”.
“We suspect [GM Korea’s] vehicles are uneconomical with the current auto tariff policy, yet GM’s continued import of such vehicles is likely a reflection that they expect a trade deal ahead with Korea,” he added. “We believe this deal could, however, take longer than expected.”
A GM spokesperson stated: “We continue to monitor closely discussions between the Korean and US governments around trade policy.”
GM can be weak to tariffs affecting its operations in Canada and Mexico, the place it makes about half the autos it sells within the US.
Analysts be aware that, as an American automaker importing giant numbers of autos from overseas, GM must weigh price concerns in opposition to the broader threat of incurring the displeasure of a Trump administration decided to deliver auto manufacturing again to the US.
However Lee Ho-geun, professor of future autos at Daeduk College in Daejeon, stated that, with the price of producing smaller vehicles as much as 40 per cent larger within the US than in South Korea, GM could possibly be persuaded to take care of their Korean presence even when steep tariffs had been to stay — particularly in the event that they had been to be provided contemporary inducements by Seoul.
Lee stated that, whereas Korea nonetheless had its deserves as a manufacturing base, “GM’s biggest difficulties in doing business in Korea are unstable labour relations, increasing labour costs and regulatory uncertainties”.
However he added it will not “make economic sense to produce small-size SUVs in the US or Mexico, because wages are too high in the US and Mexico is not free from tariffs either”.
