Chevrolet Brand Withdrawal: GM Korea Carries Cost of Parent Company Withdrawal of Chevrolet Brand from Europe | BusinessKorea

Saturday, August 27, 2016

13 March 2014 - 5:01pm
Cho Jin-young

GM Korea is likely to shoulder the entire cost associated with GM’s withdrawal of the Chevrolet brand from Europe. 

According to industry sources, the GM headquarters has recently allocated US$621 million for the withdrawal of the brand. The cost is expected to be spent as dealership cancellation charges compensation for the employees of the local subsidiaries. GM told GM Korea, which manufactures 90% of Chevrolet cars in Europe and runs 15 sales subsidiaries in 14 European countries, to shoulder the cost, because the subsidiaries belong to GM Korea. 

However, industry insiders are pointing out that GM has gone too far when it comes to this measure. According to them, the headquarters has taken a leading role in decision making and sales strategy planning in Europe with regard to Chevrolet, and thus the parent company has to shoulder at least a part of the cost. Besides, the headquarters decided to halt its business late last year with most of the 15 sales subsidiaries of GM Korea yielding more than sizable profits. 

Specifically, the 15 corporations recorded a combined turnover and current net income of 6.2094 trillion won (US$5.8182 billion) and 58.3 billion won (US$54.7 million) as of the end of 2012, respectively. In other words, GM Korea was stabbed in the back after following the instructions from its parent company. 

“In principle, both the profits and losses incurred through the sale of Chevrolet cars in Europe belong to us,” said GM Korea, adding, “Although the cost is pretty burdensome for now, we are expecting that the measure will result in greater competitiveness on our part.”

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