Seoul, April 2 (AHN) The United States' plan to impose 25 per cent tariffs on imported automobiles starting this week has ignited concerns over the long-term stability of GM Korea, the South Korean unit of General Motors (GM), raising the possibility of its potential withdrawal from South Korea, industry observers noted on Wednesday.

GM's headquarters has indicated it is closely monitoring the tariff developments and could consider options, such as shifting production locations, if the U.S. trade barriers persist, reports Yonhap news agency.

The company's history of exits from markets with rising costs -- including Australia, Indonesia, Thailand and India -- has prompted industry observers to take such indications seriously.

GM Korea was founded in 2002 when the U.S. automaker bought a majority stake in then troubled Daewoo Motor and launched a new carmaker, GM Daewoo Auto & Technology. It was renamed GM Korea in 2011.

The company has two plants in Incheon, west of Seoul, and Changwon, about 300 kilometers southeast of the capital, as well as a research and development subsidiary, which together employ around 11,000 workers.

GM previously shut down its Gunsan plant in South Korea in 2019 over profitability issues. The company's heavy reliance on the U.S. market adds to the sense of vulnerability. GM Korea exports approximately 410,000 vehicles annually, with about 85 percent of those shipments headed to the U.S.

Should the U.S. tariff take effect, the company's weakened price competitiveness could make continued production in South Korea less viable.

"GM Korea primarily produces two gasoline vehicle models for the U.S. market, and unlike Hyundai Motor Co. or Kia Corp., it lacks the same level of support at the national level," Ki Pil-soo, an automotive professor at Daelim University, said.

Kim added, "If tariffs are imposed, the company could find it difficult to justify its production operations in South Korea."

Amid rising uncertainties, GM Korea's leadership and union representatives traveled to the U.S. last month to meet with executives at GM's headquarters.

Discussions reportedly focused on GM's global production road map and future vehicle plans.

The union has reportedly called for new electric vehicle (EV) production lines to be augmented at both plants in Incheon and Changwon.

—AHN

na/