SEOUL – General Motors Co’s South Korea unit has suspended production at its two factories in the country following a local supplier’s refusal to supply auto parts, an official at GM Korea told Reuters on Wednesday.
U.S. automaker’s Korea unit was suspending production of all vehicles at its Changwon and No. 2 Bupyeong plants since last week after a local supplier, which demanded a price hike for its products, refused to supply parts.
South Korean autoparts maker ERAE AMS, which makes auto parts, such as automotive generators, calipers and brake parts, refused to supply parts, demands a price increase for its parts supplied to GM Korea’s factories.
“GM Korea plans to continue having discussions with ERAE AMS to resolve the issues,” GM Korea said in a statement.
ERAE AMS was not immediately available for comment when contacted by Reuters.
ERAE AMS has production sites in South Korea, China and United States and supplies to major automakers, including Volkswagen AG, Hyundai Motor Co and BYD among others, according to the company website.
GM Korea’s Changwon and No. 2 Bupyeong plants have a combined annual production capacity of about 70,000 vehicles, accounted for about 30% of GM Korea’s total annual production capacity last year, data from the Korea Automobile Manufacturers Association showed.
The production at No. 1 Bupyeong plant, which makes Trailblazer sport-utility vehicle (SUV), has not been affected, according to GM Korea.
Production halts at GM Korea’s factories comes after GM Korea President Roberto Rempel announced the company’s target to turn a profit next year, while it aims to hit break-even this year.
GM Korea reported eight consecutive losses since 2014, according to its regulatory filings.
(Reporting by Heekyong Yang, Editing by Louise Heavens)