GM Won’t Build Next-Generation Cruze in Korea

General Motors Co. will stop producing its Chevrolet Cruze compact sedan in South Korea by 2015 as part of a global restructuring of its factory capacity.

GM Korea's factory in Gunsan currently makes 150,000 Cruzes per year 16% of the model's global output.

GM did not disclose where that production would move when the next-generation Cruze debuts in late 2014. But Korean union leaders say the company told them the new model will be built in five regions, including China, Europe and the U.S.

The decision has sparked speculation that GM will shift Cruze production to its Opel unit in Europe, where underutilized factories have contributed to huge losses. Opel's turnaround plan includes building more cars for export markets.

GM produces the current Cruze in mass-market volume at factories in Brazil, China, Korea and Ohio and in lower volume elsewhere for local markets such as India, Russia and Thailand.

In response to earlier rumors, Korean unions in May threatened "war" if their work was moved to Europe. GM Korea assured workers then that the company had no such plan. The Cruze accounts for roughly 55% of the output of the Gunsan plant, which also makes the Chevy Lacetti small car and Orlando SUV.

GM now says the Korean unit will focus on engineering and building minivehicles. Last month the U.S. company pledged an annual investment of 1 trillion won ($924 million) in Korea for development of new vehicles, powertrains and environmentally friendly technology.