GM Korea will close its troubled plant in Gunsan by the end of May, a spokesman confirms in an interview with WardsAuto.

GM International has a plan for bringing in new product to fill the lost capacity (Gunsan could build 250,000 vehicles annually) but needs an urgent demonstration of support from the Korean government and the company’s labor union before any product allocations can be made.

Gaining positive support for its turnaround plan is a hot button issue as production allocations to the various plants in GM’s global chain are set to be made in the first week in March.

Asked whether the Gunsan plant would be sold once operations have ended there, the spokesman says there is no disposition plan at this time.

Selling the plant to any other automaker would be virtually self-destructive, most analysts believe. Competition from all four of Korea’s other automakers has held GM Korea at or below the 10,000-unit domestic sales level ever since most of Daewoo Motors was acquired by GM in 2002. It was in exports that the operation shined, and that ended when GM decided to pull the Chevrolet brand out of Europe, beginning in 2014. Most of the European-bound vehicles were produced in the Gunsan plant.

Analysts say gaining support quickly for a turnaround plan is critical. For instance, some of the overseas markets supplied by GM Korea with completely built up and completely knocked down exports might instead become served by GM affiliates in other countries.

At present, GM Korea’s CKD vehicle export volume is equal in size to all of the completely built up models the company sells globally.

Possible closure of the Gunsan plant has been a hot topic for the past two years, during which time it has operated at less than 20% of its 250,000-vehicle annual capacity. Total vehicle production at the plant last year, including domestic sales, exports and CKD kit shipments was around 30,000 units.

The plant produces only two vehicles – the Cruze compact sedan and Orlando MPV. Together, they sold only 18,621 units in the domestic market in 2017.

Speculation on closure of the plant heated up last week when GM Chairman and CEO Mary Barra addressed the GM Korea problem in a telephone conference with analysts and said the company would have to take action to make the beleaguered subsidiary profitable and that restructuring was likely.

Closure of the Gunsan plant and severance for the employees will result in a one-time special charge against income of $850 million (920 billion won), according to a statement from the company. Of that amount, $375 million (406 billion won) will be a cash charge primarily for employee-related expenses. The other $475 million (514 million won) will be an accounting adjustment to reflect asset impairment.

The charges will be made against income in the first two quarters of 2018, which will significantly amplify the losses analysts anticipate for both of those reporting periods.