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GM weighs increasing South Korean car exports to Australia

HANOI (Bloomberg) -- General Motors Co. may increase exports of cars built in South Korea to Australia to offset production declines after the automaker decided to pull its Chevrolet brand from the European market.

GM’s Korean business is considering ways to compensate for the loss of output as it halts Chevrolet sales in Europe by the end of next year, Sergio Rocha, CEO of GM Korea, said in an interview. The decline in Europe will be roughly equal to the volume that’s needed in Australia, he said, declining to give precise figures.

“It’s a very serious option that we are working on,” Rocha said earlier this week in Hanoi, Vietnam, where the company has an assembly plant. “We already export to Australia today. We can further boost the volume.”

GM will focus on Opel and Vauxhall cars in Europe as it phases out the Chevrolet brand in the region amid an overhaul of the automaker’s international operations. The company said in December it will close its Holden unit, Australia’s largest carmaker, in 2017, joining Ford Motor Co. in exiting an economy that’s struggling with high costs and a strong currency.

Chevrolet’s exit from Europe will cost GM Korea 15 percent to 20 percent of its production volume, Rocha said. The company recently reached an agreement with its union in Gunsan, South Korea, to scale back production.

“If the market is back, we have trained, skilled people to crank production up,” he said.

Last year, the company exported about 40,000 vehicles to Australia under the Holden brand and about 120,000 Chevrolet vehicles to Europe, said GM Korea spokesman Kim Byeong Soo.

The company lost “millions” of dollars in Europe, said Rocha, who also oversees GM’s operations in the region.

“With this money that we call ‘loss avoidance,’ I’m going to have a lot of money in the next couple of years that we can invest in new products to be competitive in the local market and for exports as well,” Rocha said.

Separately, GM Korea unveiled today the diesel Malibu sedan to compete in the growing diesel engine vehicle market in South Korea. The company has been producing and exporting the models since 2012 with engines brought in from Opel’s plants in Germany.

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