SEOUL (Reuters) - General Motors (GM.N) saw its South Korean vehicle sales tumble by almost half in February, as consumers took fright at its decision to slash production and restructure its loss-making operations in the country.
Although GM’s presence in the South Korean market is small with most cars made there destined for export, the slide in sales highlights uncertainty hanging over its operations after the automaker said it would shut one plant and decide the fate of three others in the coming weeks.
Its South Korean retail sales dropped 48 percent to just 5,804 in February, while wholesale sales of cars for export slid 9 percent to just over 30,000 vehicles.
“Consumers appear to be concerned about everyday-life repercussions of owning a GM vehicle if its presence shrinks in South Korea, especially weaker after-service,” said Esther Yim, an analyst at Samsung Securities.
The U.S. automaker is currently seeking concessions on wages from an angry labor union and wants financial support from the South Korean government which is set to conduct due diligence on what it has called the automaker’s “opaque” management in the country.
GM Korea likely made an operating loss of 800 billion won ($740 million) last year, a fourth consecutive year of losses since the Chevy brand was pulled from Europe in 2013, South Korea’s financial regulator said this week.
GM only has 7 percent of the South Korean market, trailing far behind South Korea’s two biggest automakers, Hyundai Motor Co (005380.KS) and Kia Motors Corp (000270.KS), which have a combined share of 68 percent.
South Korean auto sales in February were also hit by two less business days in the month due to Lunar New Year holidays with Hyundai and Kia both seeing their domestic retail sales drop 5.5 percent. Even so, they are expected to have captured some domestic market share at GM Korea’s expense, analysts said.
Reporting by Joyce Lee and Hyunjoo Jin; Editing by Edwina Gibbs