General Motors has confirmed that it will not build the next-generation of its Chevrolet Cruze compact in South Korea. It is believed that GM will shift Korea's Cruze production to Europe in order to better utilize the company's underperforming factories.
A GM Korea spokesman confirmed to Reuters on Tuesday that the company will not build the next version of the compact sedan in the country. Local unions claimed that GM was planning to end Cruze production in Korea earlier on Tuesday.
According to union spokesman Choi Jong-hak, GM Korea head Sergio Rocha has confirmed that the next Cruze will be made in Europe, although the Detroit-based automaker has yet to make such comments publicly. The Cruze is currently made in Korea, the United Sates and Brazil, as well as several other countries around the globe.
The decision to shift Cruze production is likely part of GM's turnaround plan for its European operations. GM Europe has lost more than $16 billion in just a little over a decade, with underutilized plants part of the underlying problem. Adding Cruze production to those plant could help cut costs by boosting efficiency.
The next-generation Cruze is expected to arrive in late 2014 as a 2015 model. The 2015 Cruze will ride on an all-new architecture that could underpin as many as 2.5 million vehicles by 2018.