SEOUL -- General Motors' massive operation in South Korea lost a big reason for being when bosses in Detroit decided in late 2013 to pull the plug on the Chevrolet brand in Europe.
GM Korea Co.'s four assembly plants here accounted for about one-fifth of GM's worldwide sales last year, said CEO Sergio Rocha. Chevy's retreat from Europe by the end of 2015 will saddle those plants with excess capacity to the tune of 150,000 vehicles a year.
But Rocha, a 36-year GM engineering veteran, hustled to adjust, and the business is quickly recovering from the blow. Not only is GM Korea already winning back the lost sales by tapping new markets, it has secured new production allotments.
"It was a tough call, but the right one," Rocha, 55, said of the European pullout. "We could not continue bleeding there. It's loss avoidance."
GM Korea already has recouped between 35 and 40 percent of the lost European volume, Rocha said. The fix: Finding a new outlet for the Korea-made Chevy Trax compact crossover by shipping it to the U.S. and building more knockdown kits of the Orlando small crossover for assembly in Uzbekistan.
Meanwhile, GM's looming shutdown of local manufacturing in Australia, scheduled for 2017, could open the way for GM Korea to pick up production of vehicles now made Down Under.
Korean output accounted for 20 percent of GM's global sales last year, Rocha said. For Chevrolet alone, GM Korea produced nearly 34 percent of the brand's worldwide volume last year. Rocha wants to keep Korea's contributions near the same level, even without Europe.
"We have an opportunity to recover further the losses that we've had," Rocha told Automotive News at this month's Seoul Motor Show, where he unveiled the next-generation Spark minicar.
As part of the plan, Rocha secured production of the next-generation Cruze compact car. That vehicle will enter production at GM's Gunsan plant in late 2016 for local and export markets.
The Cruze will help GM Korea boost factory utilization rates, but the future is far from rosy. GM Korea still will be playing catch-up on its lost European volume. And other factors, including high labor costs, will put the squeeze on long-term prospects for local production. Still up in the air is whether GM Korea will keep making the Chevrolet Sonic, sold as the Aveo in some markets, when the next generation is introduced.
GM Korea aims to help its own cause by selling more cars locally.
GM's sales in South Korea have risen for three straight years, advancing 10 percent to 155,000 vehicles in 2014 from 141,000 vehicles in 2011. Market share was 9.3 percent last year.
Locally built Chevys make up most of that -- Chevrolet is the third-biggest brand in South Korea behind native sons Hyundai and Kia -- but the tally also includes a relative newcomer: Cadillac. Sales at the luxury marque, which imports its vehicles from the U.S., rose 68 percent to 504 units in 2014 over the previous year. Rocha aims to more than double Cadillac sales here in 2015.
GM Korea expects a big boost this year from 10 product unveilings, including completely new nameplates, face-lifts and new powertrain options. It starts with the overhauled Spark, which enters production here in the second half for global markets, including the U.S.
