Replaced by Import Engines
As GM Korea is expected to halt production of 2.0-liter diesel engine soon, which is being produced at the Gunsan plant, due to a sharp decline in demand, the company is highly likely to shut down the Gunsan plant which is wholly responsible for production of the engine.
According to industry source on June 4, most diesel-powered sedans sold by GM Korea in the domestic market are equipped with a 1.6-liter diesel engine imported from Opel in Europe. The engine will also be used in the All New Cruze to be produced in the second half of the year. Just two years ago, GM Korea used a 2.0-liter engine being produced in the Gunsan plant to produce most of its diesel cars, such as the Chevrolet Orlando and Cruze. However, the company replaced all the diesel engines with imported ones in order to follow the current trend in engine downsizing and comply with strict Euro 6 emissions regulations. The 1.6-liter engine, which is widely used in the Chevrolet Trax, was developed by GM Powertrain Europe and is supplied by Opel.
The 2.0-liter engine being produced in the Gunsan plant is only used in the Captiva which is exported to some countries that apply the Euro 6 standards. The Captiva, which is on sale in the domestic market, uses a 2.0-liter engine produced by Opel. When some countries, which have lax regulations now, introduce the Euro 6 standards in the future, the 2.0-liter engine produced by GM Korea becomes obsolete.
Accordingly, industry watchers say that GM Korea is highly likely to shut down the Gunsan plant in the future. They believe that GM Korea will not maintain or increase investment in the Gunsan plant as the company withdrew from the European market and saw the demand of diesel cars decrease in Korea.
However, GM Korea flatly denied the rumors over the factory closure. The company said it is not considering the shutdown at the moment, though it has difficulties in management because of decreasing demand.