MUNICH -- General Motors Co. will transfer some production of the Opel/Vauxhall Mokka to Spain from Korea in a move that will help GM's struggling European operations.
The Mokka will be built at Opel's factory in Zaragoza in northeast Spain starting in the second half of 2014, Opel said today in a statement.
The move will help meet high demand for the Mokka in Europe and free capacity at GM Daewoo's factory in Bupyeong, Korea, GM said.
Opel CEO Karl-Thomas Neumann said: "The decision for Zaragoza follows our company's strategy of building vehicles where we sell them."
The decision will help address Opel capacity underutilization in Europe and "is good news for the entire organization," he said in the statement.
"We will be able to produce the Mokka in greater numbers and supply our customers more quickly," Neumann said.
Opel said Mokka production will initially be from CKD (completely knocked down) kits following an $80 million investment in Zaragoza for production but localization will gradually increase.
The decision will help to safeguard the 5,800 jobs at the plant. The two other models currently built at Zaragoza, the Corsa sub compact and Meriva compact van, are grappling with shrinking demand, pushing their 2012 sales down by 14 percent and 36 percent respectively.
The Mokka is a sister model to the Chevrolet Trax which is also built in Bupyeong, and the Buick Encore. It is Opel's first entry in Europe's fast-growing small SUV segment, joining other fresh entrants such as the Renault Captur and Peugeot 2008.
The Mokka is among the three best-selling SUVs in several European markets and has attracted 110,000 orders from the region since the car went on sale in June 2012, a spokesman said.
Opel sold 32,342 Mokkas in Europe in the first five months, according to market researchers JATO Dynamics, closing the gap on the segment's best-seller, the Dacia Duster, which sold 39,237 units and No.2, the Nissan Juke, which sold 48,043 units.
Opel lost $1.8 billion in Europe last year as it struggled to cover the fixed costs of factories operating far below capacity. Auto sales in the austerity-strapped region plunged to a two-decade low in May, further eroding hopes for recovery this year.
Reuters contributed to this report