Yet another familiar passenger car nameplate may be heading to the junkyard, General Motors’ troubled Korean subsidiary saying Monday that it may discontinue the Chevrolet Spark and replace it with a new crossover model.
The potential move has been prompted by the sharp decline in Spark sales, especially in the critical U.S. market, but also reflects GM’s efforts to try to turn things around in Korea. The Detroit-based automaker recently announced it will close one of four Korean plants and could shut down its operations there entirely without a mix of union concessions and government assistance.
The Spark is one of a growing number of sedans, coupes and other passenger car models facing an uncertain future. As TheDetroitBureau.com reported last week, the slightly larger Chevy Sonic is also likely to be pulled from production in the near future as GM shifts resources to focus more on the SUVs, CUVs and other light truck models that continue to gain market momentum.
The demise of the Spark would surprise few. Passenger cars, in particular, have been in a sharp slump over the last couple years while light trucks have surged to the point where they’re collectively generating about two-thirds of U.S. sales. Small cars, in general, have been among the models hardest hit. And Chevy’s competitors are also reconsidering their long-range plans. The Ford Fiesta was also among the models listed last week as most likely to go away.
(The Chevy Sonic is among three well-known cars that are likely to cease production. Click Here for the story.)
Spark, in particular, generated just 22,589 sales in the U.S. market last year. That was a 36% year-over-year decline, though demand for the Chevy hatchback did surge 2% in March of this year.
Spark is produced solely in South Korea, and GM’s operations there have been in a major slump, compounded not only by declining demand in the U.S. for the small models built there but also by last year’s sale of General Motors’ Opel/Vauxhall subsidiary. Under new owner PSA Group, European demand for GM Korea products has also taken a tumble.
Opel plans to shift production from GM’s Korean plants to facilities in Europe, a move that will reduce demand for products like Spark by about 200,000 vehicles a year by 2020. The Spark is sold in Europe as the Opel Karl.
(Click Here for details about GM’s potential bankruptcy plan for its South Korean operations.)
That complicates an already grim situation for GM Korea workers. The decision to close the Gunsan plant, located about 120 miles from the South Korean capital of Seoul, will result in an $850 million charge, GM said in February, including $375 million in termination benefits for its 2,000 employees. The factory operated at barely 20% of its capacity last year, building both the Chevrolet Cruze sedan and the Orlando SUV.
Meanwhile, about 2,500 of the carmaker’s Korean workers, about 15% of the total workforce, have applied for a redundancy package as a result of the planned changes. All told, GM Korea has indicated it wants to cut 5,000 jobs to become more efficient without reducing total vehicle production.
(To see more about GM’s proposed $2.8 billion investment in South Korea, Click Here.)
The automaker has also warned it could shut its Korean operations down entirely if it doesn’t receive concessions by workers there, as well as assistance from the Korean government. The often militant workers union is being pressured to announce givebacks this month.