GM Korea to Withdraw From Small Commercial Van, Pickup Markets

GM Korea will stop producing mini-commercial vehicles this year because it cannot profitably meet new government emission standards with its uniquely sized small vans and pickup trucks.

The decision was made official today by Ankush Aurora, GM Korea’s vice president-sales, marketing and aftermarket operations.

The diminutive Damas minivans and Labo pickup trucks, favored by Korea's small-business operators, have stood alone in holding the market niche for more than a decade. Other competitors long ago decided not to compete against the GM Korea vehicles in the segment.

GM Korea decided not to invest further in trying to meet the ever-increasing government emission requirements. The final obstacle was a requirement by the Ministry of Environment that an OBD II onboard diagnostic system for emissions be installed in vehicles sold in Korea beginning this year.

“From an engineering and profitability and investment standpoint, it is not feasible for these vehicles to meet the new regulations,” company spokesman Hae-ho Park tells WardsAuto.

Combined sales of the Damas and Labo in 2012 totaled 17,173 units, of which 3,265 were exported to markets in South America, Park says.

Of the total deliveries last year, the Damas minivan accounted for 10,644 units and the Labo pickup was responsible for 6,529.

The affordable vehicles are popular among small business operators in Korea, where frequent deliveries of small quantities of goods are an important part of their operations.

The price of the Damas minivans ranges from Korean won 8.9 million-9.2 million won ($8,400 - $8,700). Labos pickups sell for 7.4 million-7.8 million won ($7,000-$7,400).

Analysts say withdrawal from the segment likely will have no impact on employment at GM Korea, and in fact might reduce capacity constraints faced by the auto maker’s small-vehicle plant at Changwon, a few miles east of the port city of Busan.

The Changwon facility is running at capacity producing the ’13 Chevrolet Spark small car as well as previous models of the same vehicle. The plant delivers hundreds of vehicles daily to inventory lots at dockside, where they are driven onto ships that supply the global markets.

Changwon also manufactures its own line of engines and transmissions.