GM South Korea suspends two factories owing to procurement issues

General Motors Co (NYSE:GM) has halted production at its two South Korean sites owing to the refusal of a local supplier to provide automobile components, a GM Korea official told Reuters on Wednesday.

General Motors Co (NYSE:GM) has paused production at its two South Korean facilities due to a local supplier’s unwillingness to deliver car components, a GM Korea official told Reuters on Wednesday.

Since last week, the U.S. automaker’s Korea business has suspended production of all cars at its Changwon and No. 2 Bupyeong facilities after a local supplier refused to deliver components due to a price increase demand.

South Korean autoparts manufacturer ERAE AMS, which manufactures automobile generators, calipers, and brake parts, has refused to provide components to GM Korea’s facilities and is demanding a price rise.

“GM Korea wants to continue discussing the matter with ERAE AMS,” the company stated in a statement.

The ERAE AMS was unavailable for comment when reached by Reuters.

According to the corporate website, ERAE AMS has production facilities in South Korea, China, and the United States and serves major automakers like Volkswagen AG (OTC:VWAGY), Hyundai Motor Co, and BYD.

According to statistics from the Korea Automobile Manufacturers Association, GM Korea’s Changwon and No. 2 Bupyeong factories have a combined yearly production capacity of around 70,000 cars. This accounts for approximately 30 percent of GM Korea’s total annual production capacity.

According to GM Korea, production at the No. 1 Bupyeong facility, which manufactures the Trailblazer sport utility vehicle (SUV), has not been disrupted.

Production halts at GM Korea’s plants are a result of GM Korea President Roberto Rempel’s announcement that the company’s goal for next year is to earn a profit, while its goal for this year is to break even.

Since 2014, GM Korea has incurred eight consecutive losses, according to regulatory filings.

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