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New compact SUV originally set to be developed at GM Korea to be developed in China instead – The Hankyoreh

Despite reports that GM would be developing a compact sports utility vehicle (SUV) and a crossover utility vehicle (CUV, a mix between an SUV and a sedan) at the GM Korea Technical Center, an R&D-focused corporation that was recently spun off from GM Korea, it turns out that the compact SUV will be developed in China instead of South Korea. This is stirring up criticism that GM has gone back on its word.The upshot is that GM Korea has yanked away the “carrot” of new vehicle development that it dangled in front of the Korea Development Bank (KDB) and its labor union last year when they objected to its plans for a corporate spinoff. GM Korea says it never made any promises about the compact SUV.During a telephone call with the Hankyoreh on Mar. 8, a source at GM Korea said, “The compact SUV isn’t going to be developed in South Korea. What’s going to be developed here is the 9BUX [a project name] – the successor to Trax, which is currently under development – and a CUV that will be manufactured later at the Changwon factory.”A source at the GM Korea chapter of the Korean Metal Workers’ Union said that Jeon Ju-myeong, vice president of R&D at the GM Korea Technical Center, told union executives during a meeting on the previous day that the compact SUV has been assigned to China because the company believes it will be more effective to develop it there.But in a document released under the name of GM Korea Chief Executive Kaher Kazem on July 22, 2018, the company said it was planning to set up a new corporation that would focus on developing global products and that South Korean engineers would be developing GM’s next-generation compact SUV. Following this announcement, GM Korea and KDB, the second biggest stockholder, wrangled over the issue of the spinoff during months of negotiations before finally reaching an agreement on the spinoff on Dec. 18, 2018.KDB Chairman Lee Dong-gull explained his shift from opposition to support at the time by saying, “GM Korea’s R&D corporation has been designated as a key R&D base for compact SUVs and CUVs. We have nothing to lose and a lot to gain from this contract.”While the term was finally changed from “kompaekteu” (a Korean transliteration of “compact”) to “junjunghyeong” (the Korean term for “compact”), both are typically understood to represent the so-called “C-segment” intermediate between small and medium-sized vehicles. Accordingly, both KDB and the union understood the message to mean that the new corporate entity would be developing compact SUVs. As the description of the contract providing “nothing to lose and a lot to gain” suggested, it was understood that the new South Korean entity would be entrusted with two “new” SUV and crossover utility models rather than the 9BUX – for which substantial development progress has already been made.Disagreements on how to interpret “new compact SUV”Controversy is now raging after the new development project that GM was seen as promising to South Korea when it established its separate R&D and production entities went to China instead. In Dec. 2018, the two sides agreed on South Korea developing compact SUVs and CUV. But they have since disagreed on how they interpret the term “compact SUVs.” KDB and the GM Korea union explain that the term is a reference to a “new compact SUV”; GM Korea explains that is the 9BUX, which has already been in development.“The term ‘compact’ refers to vehicles in the C-segment,” a KDB official said.“The 9BUX that GM Korea is talking about belongs to the B-segment [small cars],” the official added, insisting that the assignment does not meet the development volume promised to the bank.The same official said KDB “could take the necessary measures if the terms of the agreement are not upheld.”A union official explained, “Since the negotiations first began with Kaher Kazem referring to compact development, everyone took that to mean we would be developing compacts according to the final agreement.”“It is absurd for GM Korea to claim that its negotiations at the time were with regard to a vehicle [the 9BUX] where development was almost entirely complete,” the official said.The controversy is narrowing to a question of how to interpret the English-language terms used in the agreement. GM Korea revealed that the agreement between GM and KDB used the term “C SUV based on 9B platform.”“The 9BUX is a C-segment SUV based on a 9B platform, just as it says in the agreement,” GM Korea insisted. It is a case of the 9BUX being categorized as B-segment by KDB and C-segment by GM.“We had several months of talks that had the whole world buzzing, and now, three months later, it’s this ridiculous situation where GM Korea and KDB are talking about two different things,” a union official said.By Choi Ha-yan and Jung Se-ra, staff reportersPlease direct comments or questions to [english@hani.co.kr]

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