An pall hangs over GM Korea, which is faced with a severe sales slump amid rumors of a possible pullout by the U.S. automaker.
The rumors were quelled temporarily after the appointment of new CEO Kaher Kazem in September but have been revived amid declining shipments to Europe and lagging sales in Korea.
They were reignited by an announcement by France's PSA that it will produce small cars and SUVs at its Opel subsidiary in Europe instead of importing them from GM Korea.
PSA did not mention a specific time and scale for the switch. It bought Opel from GM earlier this year but agreed as part of the takeover deal to keep outsourcing Opel production to GM Korea.
The decision sent alarm bells ringing at GM Korea, which made 130,000 cars for Opel last year alone, accounting for 22 percent of total sales volume last year at the Korean unit.
An industry insider said, "GM Korea's factory operation rate will inevitably decline and the company will end up facing pressure to downsize."
But a GM Korea spokesman denied this, saying "no decisions have been made" about changes to production volume.
GM Korea's domestic sales in the first 10 months of this year plunged 24 percent compared to the same period of 2016 to 110,176 cars. In a bid to claw back some ground, GM Korea unveiled a diesel version of the new Cruze early this month, but the high price tag left industry watchers scratching their heads and consumers turning their backs.
The Cruze diesel costs between W22.5 million and W25.6 million, up to W4.24 million more expensive than the rival Hyundai Avante (US$1=W1,122).
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