Major automakers in South Korea, including GM Korea, are grappling with significant production disruptions due to ongoing labor strikes and stalled wage negotiations, threatening the country’s vehicle exports and stirring uncertainty across the industry.
For the past two months, GM Korea’s factories have been unable to fully produce their most exported vehicle models due to a partial strike following a breakdown in wage and collective bargaining negotiations.
This disruption has resulted in a production shortfall of approximately 30,000 vehicles, negatively impacting both domestic car exports and sales. Tensions are high among other automakers, as wage negotiations remain unresolved, with the exception of Hyundai Motor.
According to industry sources, GM Korea will resume negotiations with its labor union starting on Aug. 28. Over the past two months, the two sides have met 20 times, ultimately reaching a tentative agreement that included a basic wage increase of 101,000 won ($75.49). However, the union members rejected the proposal in a vote held on July. 26.
The GM Korea labor union began refusing to work overtime on weekdays and weekends, starting on July 1. and a week later, they initiated a series of strikes.
These strikes have been carried out in phases, affecting different production processes at different times to maximize impact. The Changwon and Bupyeong plants, which normally produce around 60 units per hour, have experienced significant disruptions, with nearly 1,000 units lost per day.
The union has now shifted to a partial strike, where the entire plant stops working for certain periods. As the negotiations drag on, the number of unproduced vehicles is expected to grow. The Changwon plant produces the Trax Crossover, while the Bupyeong plant manufactures the Chevrolet Trailblazer.
Both models have been crucial to GM Korea’s export success. According to the Korea Automobile Manufacturers Association (KAMA), the Trax Crossover was the most exported Korean vehicle last year, with a total of 216,833 units shipped abroad. It was particularly popular in North America for its good value for money, maintaining its top export spot in the first half of this year with 156,897 units. The Trailblazer, which was the second most exported model last year with 214,048 units, saw 100,294 units exported in the first half of this year.
To meet the demand in the North American market, GM Korea has been running its production lines at full capacity and beyond since last year. The company even received government approval to exceed the legal 52-hour workweek. Last year, GM Korea produced over 400,000 vehicles for the first time since 2013, with a target of 500,000 units this year. However, the ongoing strike has cast doubt on this goal.
Other automakers, who are also looking to boost sales with new model releases, face uncertainty due to unresolved wage negotiations. KG Mobility, which recently launched the mid-size SUV Actyon, has yet to conclude its wage talks. Like GM Korea, KG Mobility had reached a tentative agreement, but it was rejected by union members.
Renault Korea, which is launching a new model for the first time in four years, was expected to reach a quick agreement, but negotiations have dragged on. Kia’s union, demanding a ‘lifetime discount’ on vehicles for retirees, has also recently gained the right to strike.
If car production is disrupted, it will inevitably impact exports. The combined export value of the five major Korean automakers reached a record $37.01 billion in the first half of this year, up 3.8% from the same period last year. An industry insider warned that if the strikes delay exports, companies could face short-term customer losses and long-term declines in competitiveness, with negative consequences for exports.
