GM Weighs Increasing Exports of Korean Cars to Australia

General Motors Co. (GM) may increase exports of cars built in South Korea to Australia to offset production declines after the largest U.S. 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, chief executive officer 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 on March 4 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 Detroit-based 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.

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.

To contact Bloomberg News staff for this story: K. Oanh Ha in Hanoi at oha3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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