GM May Need to Cut Capacity in Korea as Exports Slow

General Motors Co. may need to cut production capacity in its South Korean operations if the company can’t increase sales of the vehicles built there, the president of the GM International division said.

The automaker’s Korean operations sold 155,000 vehicles domestically last year. GM is running its plants at only about 60 percent of their capacity, Stefan Jacoby told reporters Monday. Automakers generally need to run plants at more than 80 percent to make a profit.

GM’s Korean operations have been struggling because they used to export to eastern Europe and Russia. The Detroit-based automaker’s decisions in 2013 to halt sales of its Chevrolet brand in Europe by the end of this year and in March to pull back in Russia left the Korean factories with fewer vehicles to build, Jacoby said.

“Our options are to reduce head count or install new vehicle programs to grow in Korea,” he said.

Jacoby said GM is looking at models that can sell in South Korea or be exported to other markets.

Cutting capacity in the country would be difficult because of union contracts and labor laws, he said.

(Company corrects sales figure in second paragraph.)
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