Invest KOREA

GM Korea Cruises Into a New Chapter

Automaker GM Korea looks toward more growth with a new brand and global vision

It’s a new start for GM Korea in just about every way, including in moniker.

GM Daewoo became GM Korea Company in March to better align itself with global strategies. The change signals not only a new corporate culture and portfolio, but a different company, said Mike Arcamone, president and CEO of GM Korea, in an email interview.

It’s a change you can already see on the streets. GM Korea has re-branded all of its vehicles to be Chevrolet in a move that reflects the company’s domestic focus and parent company General Motors’ (GM) continuous investment in Korea. It was a costly switch, but it worked. The rollout of Chevrolet products that began in March helped GM Korea achieve the highest sales in the five months following the re-branding since 2003.

“Launching the Chevrolet brand in Korea was the hardest decision that I’ve made,” said Arcamone, who has been with GM Korea for almost two years and GM for 31. “It’s been a great success story so far.”

The story began in 2002, when the U.S.-based GM acquired the now-defunct Korean automaker Daewoo Motor Co. The 17,000-person GM Korea is one of GM’s largest manufacturing, design and technology hubs. One out of four Chevrolets sold globally is produced here, and GM Korea is the global engineering center for GM’s mini and small-car architecture. It is also Korea’s third-largest automotive company, operating five manufacturing facilities domestically and an assembly facility in Vietnam.

The company has seen major growth, with exports increasing four-fold, from 400,000 units in 2002 to about 1.6 million units in 2010, and going to 150 countries. Total vehicle production recorded more than 10 million units in the eight years following the company’s founding.

GM Korea, located in Bupyeong, has also undergone internal changes while striving to eliminate bureaucracy and be more effective. Meetings have been shortened and streamlined, directors’ offices have gotten smaller, space for other employees has gotten bigger and women have more support than ever.

Arcamone credits GM Korea’s success to, among other factors, the company’s continuous investment in the Korean market. GM Korea has invested more than 1 trillion won every year to develop high-quality vehicles and to establish core facilities, including the Gunsan diesel engine plant, Boryeong six-speed transmission plant, Bupyeong design center and Cheongna proving ground.

In fact, GM’s investment in Korea began much earlier than 2002. In the early 1970s, it partnered with former Korean automaker Shinjin Motors, with the two companies eventually starting Saehan Motor in 1976 as a 50/50 joint venture. Shinjin Motors sold its stake to Korea Development Bank the same year. Daewoo Group acquired this stake a couple years later. Changes in corporate name and management ensued, but until the mid-1990s, all Daewoo vehicles were based on GM models. Financial woes in 2001 forced Daewoo to sell the company to GM. The same year, GM acquired most of Daewoo Motor’s assets, starting GM Daewoo Auto & TechnologyCo.

In time, GM Daewoo became a star GM subsidiary, posting record sales. Korea’s favorable business environment, good social infrastructure, highly educated workforce and harmonious labor relations helped propel the company’s success. Another key factor: strong support from suppliers.

Solid partnerships between large corporations and small and medium enterprises (SME) are a must, said Arcamone. GM Korea supports Korean SMEs so they can supply components for GM globally. In 2002, 16 domestic suppliers exported to GM. In 2010, there were 233. The same year, new orders totaled $700 million and 17 Korean companies were named among GM’s 76 suppliers of the year.

Last May, GM Korea entered into a Shared Growth & Fair Trade Agreement to establish an export support organization for domestic parts makers. The company also plans to expand the number and scope of its overseas parts exhibitions, which introduce domestic suppliers to GM’s global operations in cooperation with the Korea Trade-Investment Promotion Agency (KOTRA).

Also on the agenda is the development of more green vehicles and fulfillment of the company’s five-year plan. GM Korea released the Cruze electric vehicle test fleet last year and is preparing various types of electric vehicles using technology from the Volt, an electric car by GM that Arcamone calls “a totally new game changer in the green car market.”

The five-year plan is part of GM Korea’s goal to remain among Korea’s top three automakers in 2015 and to achieve double-digit market share. The company has already done the latter, as its market share exceeded 10 percent in June after the introduction of the Chevrolet brand and Chevy Care 3-5-7, a service program that gives customers more benefits. GM Korea followed Hyundai Motor Group, which dominated the local market.

“[The plan] was created to ensure that we become a solid player to break the monopolistic hold of our major competitor in the Korean market,” Arcamone said. “Our plan is to offer best products that are developed, designed and manufactured for consumers in Korea.”

And what is it that Korean consumers want? Good quality, reasonable prices, better maintenance service and novelty, whether it’s new performance, new functions or new technologies.

“With our long-term vision, we are completely focused on becoming a champion in both our home market and global markets,” Arcamone said.