SEOUL, Feb. 9 (Korea Bizwire) — Mired in a sales slump, GM Korea is seeking government aid in a last-minute effort to save its car manufacturing business in South Korea, the Ministry of Strategy and Finance has confirmed.
GM International head Barry Engle has been in touch with high ranking South Korean government officials to discuss the South Korean unit’s dire financial situation and request assistance, first strategy and finance vice minister Ko Hyoung-kwon said during a general meeting on Friday.
Ko said he met Engle sometime last month and the two explored options to help save the subsidiary of the American carmaker General Motors.
The finance ministry’s confirmation comes after reports this week that General Motors has been in contact with the government to explore all possible options to save its South Korean subsidiary.
Parties involved in the matter have all denied the reports of possible government aid, including the Korea Development Bank, the Ministry of Trade, Industry and Energy, and the Financial Services Commission.
During the meeting today, Ko refused to disclose the content of the conversation in detail, but acknowledged financial aid was among the options explored with Engle.
Deputy Prime Minister Kim Dong Yeon has already said that he has been briefed on the matter when asked about GM’s withdrawal from the South Korean market.
Poor sales and rising labor costs have seen GM’s South Korean operations struggle for some time, fueling speculation that the car maker could soon pull out of South Korea.
As the third largest automobile manufacturer in South Korea, GM’s exit could lead to thousands of job losses at its manufacturing plants.
“With nearly 300,000 jobs and the survival of the automobile manufacturing industry at stake, the issue needs to be approached very carefully,” said Choo Kyung-ho, a lawmaker from the main opposition Liberty Korea Party.
However, one source close to GM Korea denies there has been any formal request from the company for help from the government.
“GM International president Barry Engle met with officials from the government and the Korea Development Bank to explain the dire financial situation facing the company. General Motors however didn’t suggest any specific plans or the amount of aid,” the source said.